Illustrative image (Source: VNA) Shares narrowed their losses in the afternoon session on August 19 following information that the Ministry of Finance finally issued a circular providing guidelines for the implementation of Decree 60, which paves the way for public companies to raise foreign investment.
According to national television VTV1's business finance bulletin at 12.30pm, the State Securities Commission (SSC) issued Circular 123 guiding the relaxation of foreign ownership limits in public companies.
Though appearing for just a few seconds, the information had an immediate, positive impact on the market, which was hit hard by the central bank's currency devaluation in the morning.
The State Bank of Vietnam decided to weaken the reference rate (the interbank exchange rate) by another 1 percent, reducing it from 21,673 VND to 21,890 VND per US dollar. The monetary authority also expanded the dong's trading band from plus or minus 2 percent to 3 percent.
This is the third devaluation by the Vietnamese central bank since early this year. Last week, it had increased the trading band from 1 percent to 2 percent to counter China's recent currency depreciation.
The VN-Index on the HCM Stock Exchange dropped more than 10 points, or 1.73 percent, in the morning. The HNX-Index on the Hanoi Stock Exchange also dived by 0.93 percent.
Things changed in the afternoon session, when the SSC announced Circular 123/2015/TT-BTC, which will go into effect on October 1, 2015.
The new circular provides detailed guidance for raising foreign ownership of companies and eases administrative procedures for foreign investors to invest in the domestic market.
Both markets responded positively. The VN-Index narrowed the morning's loss to 0.41 percent, closing the session at 577.82 points. However, the market condition remained negative with 85 stocks rising and 125 declining.
Shares expected to benefit from easing foreign ownership, like securities and insurance, rebounded. Saigon Securities Inc (SSI), HCM Securities Corp (HCM), Bao Minh Insurance Corp (BMI), BIDV Insurance Corp (BIC) and Refrigeration Electrical Engineering Co (REE) climbed into positive area by the end of the session.
The biggest insurance company on the stock exchange, Bao Viet Holdings (BVH) managed break even after a steep fall in the morning.
Most banks, oil and gas shares continued to sink on the continued depreciation of the dong and slumping global oil prices.
On the Hanoi Stock Exchange, the HNX-Index inched up 0.09 percent to finish at 79.67 points but losing shares still outnumbered gainers by 96 to 71, another 195 stocks closed unchanged.
More than 144 million shares worth 2.3 trillion VND (102.7 million USD) were traded on the two exchanges, slight volume and value increase over the previous session.
Foreign investors, perhaps more concerned by the devaluation than the positive Decree 60 news, remained net sellers yesterday in the two markets, unloading combined shares worth 145 billion VND (6.5 million USD).-VNA
