Vietnam rejects share market proposal

Only five stocks are traded on the Vietnam stock market, which opened in July 2000

HANOI, Vietnam -- Vietnam's stock market watchdog has rejected a proposal by the Securities Trading Center that investors must hold shares for three to six months before reselling them.

Recent trading sessions have been marked by volatility in the market , which opened in July last year.

Only five companies so far are listed in the Vietnamese market: Referigeration Electrical Engineering Corp, Sacom, Hapaco, Transimex Saigon and Lafoco.

Vietnam's stock index has dropped in the last three sessions due to investor caution after changes in trading regulations last month.

These included a widening of the trading band to seven percent from previous two percent, a move which increased the risk of sharp losses.

Tight supply and strong demand

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Previously the market had climbed in virtually every session since it opened last year. The tight supply and strong demand has meant stock prices have risen by up to ten times their face value.

The Vietnam Index ended down 9.11 points, or 1.82 percent, at 491.17 on Monday, its latest trading session. The next trading day is Wednesday.

Tuesday's official market bulletin said the State Securities Commission had responded to the proposal from the Securities Trading Center by saying it was not its policy to implement such a measure at present.

It gave no reason.

Last month the Securities Trading Center proposed to the SSC several measures to cool down market activity, including the controversial retention rule.

Tuesday's Saigon Times Daily said some 70 investors had signed a letter sent to the SSC and the STC saying the step would be unfair and cause investors to lose confidence in the market at a time when share prices were falling.

Reuters contributed to this report.