Vietnam to widen trading band as stock market recovers

Jun 16, 2008, 10:54 GMT

Hanoi - Vietnam will widen the band within which stocks on the Ho Chi Minh City stock exchange are allowed to trade, in a move to help sustain its recent recovery, the bourse's director said Monday.

'We will raise the trading band from the current 2 per cent to 3 per cent from June 19,' Tran Dac Sinh, director of the Ho Chi Minh City Securities Trading Center, said Monday. 'This will be the first step, and the trading band will gradually be raised to 5 per cent.'

Shares closed up for the third consecutive day Monday, after 25 straight days of declines.

The government imposed a 2-per-cent trading band on the market this spring to slow its precipitous decline since late last year. The market lost over 60 per cent of its value between January 1 and June 11, making it the world's worst performer during the year.

Shares began rising late last week after the government devalued the Vietnamese dong by 2 percent and raised the prime lending rate from 12 to 14 per cent, easing fears the Vietnamese dong might face a looming currency crisis.

Analysts also said prices had declined to the point where foreign investors began seeing some Vietnamese shares as good values.

But some analysts said the market's recovery might be dampened by expectations of lower earnings by Vietnamese companies, after the slowdown in the country's economy due to high inflation this spring.

'The earnings results for the second quarter will probably be a bit negative,' said Dinh Anh, head of research at Ho Chi Minh City-based Saigon Securities.