Vietnam may merge stock exchanges next year, regulator says

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Vietnam's securities regulator will submit plans to merge the country's two stock exchanges in an effort to improve the quality of listings after the benchmark index fell by the most among Asian equity measures last year.

The Ho Chi Minh City Stock Exchange, the nation's main bourse, and the Hanoi Stock Exchange will merge in early 2013 if the plans are approved by the government, Vu Bang, chairman of the State Securities Commission, said in an interview at an equities conference in Hanoi Friday. The regulator will seek government approval in the third quarter, Bang said.

The commission may also raise the minimum registered capital for companies that want to list on the main bourse to at least VND120 billion ($5.76 million) from VND80 billion from the second quarter, while the threshold in Hanoi will rise to VND30 billion, he said. Companies that are already listed in the two exchanges will have about five years to meet the requirement, Bang said.

"The move is in line with models in the region and in the world," he said. Listed companies in Hanoi bourse will gradually move to the Ho Chi Minh exchange in the "long run," he said, without giving a specific timeframe.

In Asia, Japan's Fair Trade Commission last month started the second phase of its review into the merger between the Tokyo exchange and Osaka Securities Exchange Co., the country's two biggest bourses. Deals worth $37 billion have been proposed between global exchanges in at least the past 15 months, with cross-border plans meeting resistance on the grounds that they hurt competition.

Market rebound

The benchmark VN Index jumped 2.7 percent to 439.60 on Friday, extending this year's rebound to 25 percent after the central bank signaled it may cut borrowing costs. Inflation decelerated for a sixth month, with consumer prices climbing 16.44 percent in February from a year earlier, down from the previous month's 17.27 percent.

"The monetary policy has been more flexible and there have been signs that interest rates will drop," Bang said. "The stock market will have an opportunity to recover."

The VN index slumped 27 percent in 2011, making it Asia's worst performer according to data compiled by Bloomberg.

The Ho Chi Minh City Stock Exchange has increased its total number of listed companies to 303 companies from two when it opened in 2000. The Hanoi Stock Exchange now has 395.

"The increase in listing standards is aimed at raising the quality of listed companies," the commission said in a document on Friday.

Raising funds

As part of an attempt to boost the stock market, Vietnam will merge and shut "weak" securities firms as it expects to cut the total number of the firms from the current 105, Minister of Finance Vuong Dinh Hue said at today's conference.

"The government always considers the stock market as an efficient channel to raise funds for the economy" and the health and stability of the market are a top priority, Hue said.

Vietnam will extend trading hours on the two exchanges from March 5 by adding an afternoon session, Bang said last month.

Prime Minister Nguyen Tan Dung today signed a directive asking the Ministry of Finance and other ministries to implement a strategy to develop the stock market in the 2011-2020 period, according to a statement posted on the securities commission's website. Dung also asked the finance ministry to intensify supervision of the market and study a plan to offer equity derivatives, according to the statement.

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