HANOI (AFP) — Vietnam's main stock exchange will widen its trading band Thursday, the market regulator said, apparently bidding to speed up a share price recovery that began last week following heavy losses.
The Ho Chi Minh City Stock Exchange (HOSE) will allow the benchmark VN Index to rise or fall by up to three percent a day, up from the previous limit of two percent either way.
The move comes after share prices began rising last week following six weeks of daily losses amid mounting concern about the Vietnamese economy's prospects as inflation rockets.
"It's a welcome move," said Dominic Scriven, director of Ho Chi Minh City-based investment fund Dragon Capital.
"It indicates the government is alive to the calls from investors to move towards a more normal trading mechanism, which in turn will allow the market to achieve better price discovery."
The VN Index -- which peaked at 1,170 points in March last year -- has fallen sharply since October, leading the bourse to limit the speed of the plunge by narrowing the daily trading band earlier this year.
The intra-day trading band was cut from five percent to one percent in late March and then raised to two percent in early April by market regulator the State Securities Commission (SSC).
Vietnam's stock market plunge came amid wider economic woe, including 25 percent year-on-year inflation in May, which led the communist government to cut its 2008 economic growth target to 7.0 percent from 8.5 percent last year.
In recent days the HOSE has recovered somewhat, with the index rising on four consecutive trading days from a low of 370.45 last Wednesday to close at 384.71 on Tuesday.
The SSC also announced on its website that the intra-day trading band for the smaller Hanoi Securities Trading Center (HASTC) would be raised from three to four percent from Thursday.
Copyright © 2009 AFP. All rights reserved. More »
