Hanoi allows Morgan Stanley to buy shares in dollars
HANOI, Feb 22 (Reuters) - The Vietnamese government said it has allowed Morgan Stanley (MS.N) to use dollars to pay for a stake in unlisted Petrovietnam Finance Corp in a move to help foreign investors hampered by a shortage of the Vietnamese dong.
The government, approving a proposal by state oil group Petrovietnam, has also assigned the central bank and finance ministry to work on regulations to allow foreign investors to use foreign currencies to pay for Vietnamese shares, it said in a statement seen on Friday.
Last month, Vietnam said it was planning measures to improve its capital markets, after foreign investors and their brokers in Vietnam complained that a shortage of the dong has made it difficult to pay for securities in the country.
The Vietnamese government has a tricky balancing act, on one hand tightening monetary policy in an effort to reduce double-digit inflation in the country while trying to maintain foreign investor interest in its stock market.
Foreign investors contribute about 20 percent of trading volume in the market. Foreign investment in 150-plus listed companies is capped at 49 percent and 30 percent for banks.
The central bank has since eased restrictions on bank loans to local stock market investors but has also moved to reduce cash in the economy to tame inflation by forcing banks to buy Treasury bills worth 20.3 trillion dong ($1.26 billion) next month.
The Ho Chi Minh City Stock Exchange .VNI closed at 687.10 points on Friday in a week that saw shares falling by 16 percent following the central bank order.
In December, Morgan Stanley agreed to buy a 10 percent stake from Petrovietnam Finance Corp for $217 million, the financial arm for state oil group Petrovietnam said.
Morgan Stanley has been stepping up its operations in communist Vietnam, where booming growth and a freeing up of the economy is fuelling strong demand for financial services.
The Wall Street investment bank established a joint venture with small Vietnamese brokerage Gateway Securities earlier this month. (Reporting by Ho Binh Minh; Editing by Valerie Lee)
