[Vnbiz] Securities and The Visible Hand

[Tran Dinh Hoanh]

Dear chi Thu Huong & CACC,

Thanks for the posting, sister.

It is obvious that stock price was in free fall.  Stock is the property that
is most sensitive to human psychology, more than any other kind of
property.  And the Vietnamese stock price has not been very rational, ie.e.,
not really related to the issuing companies' real strength.  It was a
psychological phenomenon that pushed the price up much higher than the stock
value; and when it went down, it basically crashed.  That mean, the fall
might not have stopped where it should stop rationally.  It simply fell and
could gone all the way to the bottom, meaning to VNINDEX 0.

In that situation probably it is justified for the investors and the
government to use some emergency measure to save the market.  When investors
talked about agreement not to sell more stock, that obviously is an
antitrust violation in normal circumstances, but probably would be justified
in "saving the industry."

When the government stopped new companies from going public (issuing IPO),
it would be justifiable.  The truth is, no company would issuing IPO when
the market crashes anyway.

The more questionable practice is the state-owned SCIC's purchase of stock
to stop the free fall.  I would think that is a justifiable move to stop a
total crash.  The free fall was psychological, meaning if there was no
intervention, panic investors may have just dumped their stock till the
entire stock market collapsed totally.

Probably a total crash, in normal economic condition wouldn't hurt the
country that much.  But we are in a middle of high inflation, a total stock
crash would make things much worse.  So helping to stop the free fall is a
justifiable move.

In the long term, SCIC should not interfere with the stock market though.
But I wouldn't worry much about it, because if SCIC interferes  with the
stock market, SCIC will go bankrupt very soon.  Stock investment always
carries a lot of risk,and if SCIC is not professionally in the stock market
to make money, it has a much bigger chance to lose its shirt if it messes
around with stock.

Have a great day!

Hoanh


On Tue, Mar 11, 2008 at 9:01 PM, Thu Huong Nguyen <thuhuong210 at yahoo.com>
wrote:

> [ Vietnam Business Forum ]
>
>
> Dear bro and sis,
>
> FYI
>
>
> http://www.bbc.co.uk/vietnamese/vietnam/story/2008/03/080310_viet_inflation.shtml
>
> Sorry it is in Vietnamese.
>
> Regards,
> Thu Huong
>
>  ------------------------------
> Get the name you always wanted with the new y7mail email address<http://au.rd.yahoo.com/mail/taglines/au/y7mail/default/*http://au.yahoo.com/y7mail/?p1=ni&p2=general&p3=tagline&p4=other>.
>
>
>


-- 
Tran Dinh Hoanh, Esq., LLB, JD
Washington DC
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