Bourse manipulation sophisticated: legislative body official

Price manipulation has occurred in the stock market, with increasingly sophisticated tactics, said Vu Hong Thanh, Chairman of the National Assembly's Economic Committee.

“Some stocks and groups of stocks feature unusual price movements that are unrelated to enterprise's financial performance, inflicting direct losses to investors and harming the stock market's stability and transparency," Thanh told the National Assembly's ongoing session that kicked-off on Monday.

The economy is recovering and growing as Covid-19 has been basically put under control. However, the economic commission is concerned about the risk of bad debts, as well as the risky, unsustainable and unstable securities, corporate bond and real estate markets.

The corporate bond market is equivalent to 15% of GDP by the end of 2021, up 17% from 2020. The fast-growing market is fraught with risk and imbalance.

The total issued corporate bonds reached VND637,000 billion ($27.5 billion) in 2021, 36% higher than in 2020. Of this, private placements account for 95%, with the remaining 5% via public offerings.

Corporate bonds with no collateral or backed by high-risk assets like unlisted shares and projects or assets that would take shape in the future remained high, affecting the safety of the market.

Banks' investment in corporate bonds surged significantly, rising by 19% from the end of 2021 to the end of March, with a total balance of VND326,500 billion ($14.1 billion). The majority of banks invested in corporate bonds tied to the construction and real estate industries, totaling VND160,600 billion ($6.9 billion), accounting for nearly half of total corporate bond investment in the system.

"The government should explicitly analyze the risks in the corporate bond market in recent years, outlining the risks that firms would be unable to repay obligations due and having suitable methods to handle them," the committee suggested.

This year's corporate bond maturities totaled VND145,500 billion ($6.3 billion). The real estate sector accounts for 43% of this, and credit institutions are responsible for 20%.

Potential risks in the securities, corporate bond and real estate markets were also cited by National Assembly Chairman Vuong Dinh Hue and Deputy Prime Minister Le Van Thanh as one of the limitations and difficulties in managing the economy and capital markets recently.

The deputy PM said that crime prevention, especially organized crime and manipulation of the stock and real estate markets, has been drastically implemented by the government.

Since the end of March, the Ministry of Public Security's investigative agency has prosecuted criminal cases of stock market manipulation at FLC, Louis Holdings, and Tri Viet Securities Company.

In the following months, the government will accelerate the restructuring of the credit institutions, which involves handling bad debts, particularly weak commercial banks.

Measures will also be applied to improve the administration and supervision of the stock, corporate bond and real estate markets, allowing them to grow healthily.