Tighter regulations to prevent manipulative practices

May, 28/2022 - 08:37
Many investors and firms in Việt Nam have reached a financial size that they are well-positioned to manipulate the securities market, exposing the need for tighter regulations.

 

An investor monitors stock prices. Photo anninhthudo.vn

HÀ NỘI — Many investors and firms in Việt Nam have reached a financial size that they are well-positioned to manipulate the securities market, exposing the need for tighter regulations.

Financial expert Vũ Đình Ánh underlined transparency as the key to a healthy securities market. Without transparency, certain companies can rely on illegal practices, including insider trading and price manipulation, to make profits at the cost of market stability.

“It’s time to enhance market management, tighten up on insider trading and price manipulation, and promote technology in line with market development," he said.

"That’s what the authorities, securities firms and investors have to do. If they can get the job done, the securities market would become a sound capital channel that supports economic growth."

Nguyễn Hoài Thu, investment manager at the VinaCapital Fund Management JSC., believed that the State Securities Commission and stock exchanges should establish a mechanism to supervise highly-volatile stocks and hold firms accountable for suspicious volatility.

"Close watch on highly-volatile stocks will help curb insider trading and price manipulation," she explained.

The manager also mentioned severe punishments for insider trading in some countries and called for stricter regulations in Việt Nam. Additionally, she urged the authorities to prohibit insiders from making comments on their firms' stock prices as the comments might constitute the disclosure of material information.

"We have to separate consulting branch from business branch in securities firms so the latter could not interfere with the former and vice versa," she added.

Economic expert Đinh Trọng Thịnh underscored inexperienced investors and the bandwagon effect as the driving forces behind the recent market turbulence.

"The recent market turbulence indicates that the two million newly-emerged account-owners have little understanding of the market," he said.

"They'd better equip themselves with knowledge before making any investment decisions, thereby not being taken in by bad traders."

Despite the turbulence, some experts still had an optimistic outlook on the market since Vietnamese economy enjoyed high growth rates, stable interests, low inflation and abundant reserves. 

Notably, foreign investors have net-bought US$$170 million of stocks in the market since early April and estimate P/E ratio of Vietnamese stocks at 10.6. — VNS