Vietnam Stocks Regulator Stops Brokerages From Lending Shares

VNStockNews.com - Vietnam’s securities regulator ordered brokerages to stop lending shares to investors in a bid to rein in speculative trading and volatility in the stock market.

The State Securities Commission plans to end the practice of lending shares from Dec. 1, according to a statement on the regulator’s Web site yesterday. The benchmark VN Index rose or fell more than 2 percent in a single day seven times last month, compared with one such move in Japan’s Nikkei 225 and three for the Dow Jones Industrial Average.

Vietnam, struggling to control accelerating inflation and a widening trade deficit, yesterday raised its key interest rate. The ban on lending aims to stop brokerages from letting large clients trade in borrowed shares to get around a rule against selling equity within three days of purchases, Hanoi-based BIDV Securities Co.’s brokerage manager Le Thi Hai Duong said.

“The move may extend losses of the market for a while, but in the long run, it’s good because it will be fairer for investors to trade,” Duong said by telephone today.

The VN index, which has advanced almost 53 percent this year, fell for a fifth day to its lowest since Aug. 7. The central bank yesterday said it would also devalue the currency for the first time since December.

The ban on lending “aims to ensure fairness and equal chances for every investor, big ones and small ones, to trade in the market,” Vu Bang, chairman of the regulator, said in a phone interview. “It is also to promote transparency and stability of the market.”