The influx of individual investors has seen securities prices go up by 75 percent and the State Securities Commission (SCC) is afraid this, on top of the pile of cash investment funds are sitting on, could destabilize the market.

A representative of the Hanoi-based Bao Viet Security Company said its trading center had been overloaded for the past two days.

The investors, most of whom are day traders – people who buy and sell quickly to book profits – make 2-3 percent, even 5 percent, in a day.

Nguyen Duy Hung, a top official at the Saigon Securities Company, said the prices were going through the roof because more and more money was chasing the same limited supply of stocks.

Besides, foreign investment funds like Vinacapital and Vietnam Partner are awash in liquidity cash, waiting to enter the market. Hung said these funds had the financial capacity to buy out three Vietnam-sized stock markets.

Market analysts say a majority of the Vietnamese investors are motivated by little more than the herd effect in purchasing stocks. Many know little about the working of the market but rush in where angels fear to tread, they say.

The VN Index has increased by 216 points, or 75 percent, since the beginning of this year, reaching 532.60 points on April 6.

Nguyen Quang Vinh of Bao Viet said the massive flow of cash would push the index beyond 600 soon, breaking the record of 571 set in 2001.

All the listed shares have at least doubled since September with Petroleum Mechanical Stock Company and Saigon Hotel Corp doing so in just a month.

Action needed

The SSC recently asked the HCMC and Hanoi stock exchanges to impose stringent controls on transactions.

Analysts fear the bubble might burst if there is no intervention. The implications could be much wider since several banks had lent huge sums against securities, the watchdog said.

It warned the two exchanges must report the operations of listed firms in a timely and comprehensive manner and closely supervise trading.

Last week it wrote to stock brokers also telling them to keep a close eye on their clients’ transactions.

However, the market has shown no signs of a correction and continues to be bullish.

Source: Thanhnien.online