Vietnam Tightens Limits, Rules in Over-the-Counter Stock Market

By Nguyen Kieu Giang

Nov. 25 (Bloomberg) -- Vietnam’s government is clamping down on its informal stock market, ordering companies to publish annual reports and limiting price moves to protect investors and enhance transparency.

Price moves for shares of companies traded in the so-called “over-the-counter” market will be limited to 10 percent a day, according to a statement e-mailed today by the Ministry of Finance. Trading of the shares will move to the Hanoi Securities Trading Center, the nation’s second bourse, which will assume control of the market under the new rules.

“The over-the-counter market was out of control and investors’ interests weren’t ensured,” Tran Van Dung, director of the Hanoi bourse, said in a telephone interview today. “Once it is regulated, the government can manage the market and protect the interests of investors.”

The Ho Chi Minh City Stock Exchange’s benchmark VN Index has plunged 65 percent this year, making it Asia’s second-worst market after China’s 66 percent slump. Vietnam’s stocks have tumbled on concern the fastest inflation in 16 years will keep interest rates at the highest in the region.

Forcing companies to publish annual financial reports will help reduce risks for investors, the Hanoi bourse’s Dung said. Companies must publish information within “24 or 72 hours after events occur,” the statement said, without explaining the two deadlines or detailing the kind of information that will be required.

The new measures will take effect 15 days after publication in the government’s official gazette, the ministry’s statement said.

As of Nov. 21, there were 1,069 companies with total capital of 142.5 trillion dong ($8.4 billion) registered with the State Securities Commission, the market regulator, to trade in the over-the-counter market, according to the agency’s Web site.

To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net