Vietnam is preparing a series of measures to support its stock market, including a proposal to establish a government-backed stabilisation fund, following a sharp sell-off triggered by the Iran war, according to documents seen by Reuters.
The plan, submitted by the Ministry of Public Security to Prime Minister Pham Minh Chinh, outlines steps such as encouraging corporate share buy-backs, tightening trading limits, and using influencers to promote positive market sentiment.
The proposals followed a 6.5% drop in Vietnam’s benchmark stock index on March 9, highlighting growing investor anxiety over global instability.
Market Shock and Government Response
Vietnam’s benchmark index fell 9.3% over March, making it one of Asia’s worst-performing markets as concerns over fuel supply disruptions and broader economic fallout intensified.
Authorities moved quickly, with the prime minister’s office instructing financial regulators and the central bank to review and act on the recommendations. However, it remains unclear how many of the proposals will be implemented.
Police Ministry’s Expanding Role
Notably, the Ministry of Public Security not traditionally responsible for economic policy has taken a leading role in shaping the response.
Its influence has grown significantly since To Lam, the ministry’s former head, became the country’s top political leader in 2024.
Trading Curbs and Market Intervention
Among the key proposals is the creation of a stabilisation fund that would purchase shares during heavy sell-offs, funded through taxes and transaction fees.
Additional measures include:
- Narrowing daily trading limits to 3–5%
- Temporary trading halts during extreme volatility
- Expanding margin lending limits for brokers
- Offering tax incentives for share buy-backs
These steps aim to curb panic selling and restore investor confidence.
The plan also calls for tighter control of information flows, urging the use of influencers and state media to promote positive messaging about the market.
Authorities view communication as a key tool in managing investor sentiment during periods of financial stress.
Global Pressure and Upgrade Risks
Vietnam’s $300 billion stock market is on track for a potential upgrade from “frontier” to “emerging” status by FTSE Russell in an upcoming review.
Officials fear that continued volatility could jeopardise this reclassification, which is seen as critical for attracting foreign investment.
A Regional Challenge
Vietnam’s situation reflects broader pressures across Asia, where governments are stepping in to stabilise markets amid geopolitical tensions.
From emergency bond buy-backs in South Korea to currency interventions elsewhere, policymakers are increasingly deploying robust tools to manage financial risks.
(with inputs from Reuters)
