* VN index among Asia's top performers this year
* 10 percentage point increase proposed
* New shares will have no voting rights
By Duy Vu
HANOI, June 7 Vietnamese regulators will next
month propose allowing foreigners to own bigger stakes in listed
companies to boost the country's stock markets, but some
investors warned that gains could be limited because of the lack
of attractive firms and restrictions on voting rights.
The State Securities Commission (SSC) wants to encourage
more foreign inflows into one of Asia's best performing bourses
and the plan to raise the 49 percent foreign shareholding limit
by 10 percentage points helped lift the benchmark VN Index
1.4 percent on Friday to a week high of 527.97 points.
Traders say the index in Ho Chi Minh City, which has gained
26 percent this year, has been an attractive bet for foreign and
domestic investors reluctant to put their money elsewhere in
Vietnam. A slowing economy hamstrung by banks laden with bad
debts and uncertainty about the government's ability to tackle
structural problems are the main reasons for the exchange's
"It's good policy and it would help the market with more
liquidity from foreign investors," said Alan Pham, chief
economist at VinaSecurities. "It will bring more foreign
Nguyen Son, director of SSC's Market Development Department,
told Reuters the additional stakes made available to foreigners
would be restricted to non-voting shares, which some traders
said could dampen enthusiasm.
"Though it will have a positive impact initially, the
regulator's move is not strong enough for foreign investors to
put money in (for) the long term," said Trinh Hoai Giang of Ho
Chi Minh City Securities.
Vietnam's two stock indices, the benchmark VN Index and the
smaller Hanoi Stock Exchange Index, have a combined
market capitalisation of almost $45 billion, compared with $420
billion in Thailand and $459 billion in Indonesia
. Vietnamese regulators say they are also working out
plans to merge the country's two bourses.
Michel Tosto, director of institutional sales at Ban Viet
Securities, said the plan to increase foreign shares could take
time to implement and foreign investors would be selective about
companies in which they wished to buy shares.
"Of course, should that project move forward, it would
certainly attract foreign investors to Vietnam. The problem is
that there's not enough quality companies," he said.
(Additional reporting by Ngo Thi Ngoc Chau; Writing by Martin
Petty; Editing by Matt Driskill)