Hanoi To Launch Trial Bourse

Vietnam plans to launch an experimental stock exchange at the end of the year and will allow foreign brokerages to participate in joint venture with local companies, the State Securities Commission said on Monday.

Hanoi pledged five years ago to open a bourse but the project has been delayed by a lack of suitable candidates for listing, slow progress on privatisation and a Soviet-era accounting system.

The decision to move ahead marks a modest breakthrough but the choice of a trial exchange underscores Hanois caution. Officials are concerned that the market could be vulnerable to the wild fluctuations that plagued Chinas fledgling exchanges. Its our view that we have to set up a securities market as soon as possible - but carefully, said Nguyen The Tho, director of international relations at the SSC, which is charged with overseeing the planned exchange.

 

The SSC would submit a proposal to the government next month for the trial bourse to be set up in Ho Chi Minh City, he said. Once approved, it could be operating in the fourth quarter. The proposal envisages an exchange trading 10 to 15 companies, mainly picked from 17 state-owned concerns that have been privatised. Most shares in these companies have ended up in the hands of workers and management but about 30 per cent has been bought by the Vietnamese public. The companies have an average capitalisation of just under $1m. Some purely privately run companies could also be considered. One banker said up to 30 per cent of shares traded on the trial exchange would be available to foreigners. A draft proposal says that foreign companies should be allowed 25 to 30 per cent of any joint venture brokerage, although foreign bankers have said this was likely to be too low to attract much interest. On the whole, foreign securities companies would like to have control, if not close to control. Theyre worried that the

local partner might overexpose the venture, posing a risk to the mother company at home, said Jonathon Waugh of Jardine Fleming in Vietnam. Daiwa Securities of Japan last year signed an agreement with a Vietnamese bank to set up a joint venture brokerage. Copyright Financial Times Limited 1998. All Rights Reserved.