Vietnam aims to shore up battered stocks with stabilisation fund, documents show
Other potential actions listed in proposal include incentives for corporate share buybacks, limiting daily trading bands, and the use of influencers
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[HANOI] Vietnam is planning measures to support its stock market and has proposed the establishment of a government-backed stabilisation fund, after sharp declines in share prices due to the Iran war, according to documents seen by Reuters.
Other potential actions listed in the Mar 17 proposal by the Ministry of Public Security to Prime Minister Pham Minh Chinh include incentives for corporate share buybacks, limiting daily trading bands, and using influencers to promote positive messaging.
The proposals were made in reaction to a 6.5 per cent drop for Vietnam’s benchmark stock index on Mar 9, the document said.
The prime minister’s office instructed the finance ministry and the central bank on Mar 25 to act on the recommendations, according to a separate document. It was not immediately clear, however, to what extent the recommendations will be adopted.
The contents of the documents are being reported for the first time by Reuters.
None of the ministries or state institutions cited in this article immediately responded to requests for comment.
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Vietnam’s benchmark stock index tumbled 9.3 per cent in March, making it one of Asia’s worst-performing share markets, as investors fret about fuel shortages and the wider economic fallout from the war. Vietnam sources most of its oil from the Gulf.
The index finished 0.5 per cent lower on Thursday, paring some losses after Reuters reported the proposals.
The proposed measures highlight the growing challenge Asian economies are facing in safeguarding their capital markets in the face of the turmoil from the war.
South Korea announced a US$3.3 billion emergency bond buyback last week while central banks in the region have had to dig deep into their toolkits to support their weak currencies.
The sharp decline in Vietnamese stocks is “an excessively negative reaction from investors that necessitates a restructuring of the market”, according to the document from the ministry which oversees the police.
The ministry is not responsible for economic or financial policy, but it has become increasingly influential since its former head, To Lam, became secretary general of the ruling Communist Party in 2024, the country’s most powerful role.
Chinh is expected to retire as early as next week and a new government will be formed, but policies are unlikely to be changed.
Vietnam’s stock market, worth some US$300 billion, is widely expected to be reclassified as a developing market from “frontier” status by index provider FTSE Russell in a review due on Apr 7.
The proposed measures are aimed at reducing the risk that current market volatility could delay the upgrade to its market status, the document noted.
The proposed “stock market stabilisation fund” would buy shares during episodes of heavy selling and be financed with taxes and fees on securities transactions, the ministry document said. It did not mention how big the fund might be.
The fund was likely to be of limited size because of Vietnam’s restrictions on the use of public money, said a person familiar with the proposal who declined to be identified as the plan has not been publicly disclosed.
Share buybacks could be facilitated through exemptions from taxes and fees, and similar waivers should be applied to investment funds that buy shares during market downturns, accrding to the document.
It urged the use of influencers to spread “positive statements” about the market and called for tighter direction of the domestic press – already under state control – to reassure public opinion during financially sensitive periods.
It also proposed narrowing daily trading bands to 3 to 5 per cent from the current 7 to 10 per cent and suggested temporarily halting trading for “a few sessions” during extreme selloffs.
The ministry also called for increased caps for brokers extending margin loans to investors, allowing them to lend up to 7 to 10 per cent of their capital, instead of the current limit of 5 per cent.
Noting risks to the party’s target of 10 per cent annual growth through 2030, the document also urged the central bank to “study the reduction” of interest rates for the real estate sector, a major driver of economic growth. REUTERS
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