(Corrects position in paragraph 6 to spokesman, not managing director)
HANOI, Aug 26 (Reuters) - Vietnam’s finance ministry has proposed allowing short selling in shares for the first time, in a bid to boost trading volumes.
Short-selling allows traders to borrow a company’s stock with a view to selling it so they can hopefully buy it back later at a lower price and pocket the difference.
The Southeast Asian nation first proposed short-selling in 2014 and the practice remains illegal until now.
Vietnam, among the world’s fastest-growing economies over the past two decades, is seeking an upgrade to emerging-market status from frontier level by the MSCI Inc, the world’s largest index provider.
The proposal has been well received among international financial institutions.
“PASLA welcomes the news that Vietnam is exploring allowing short-selling and securities lending for the first time,” said Adam Harper, a spokesman for the Pan Asia Securities Lending Association (PASLA).
Harper said such a move was “integral to the development of liquid, robust capital markets”.
Vietnam’s main index has a market capitalisation of nearly $132 billion, about a third of the value of its counterparts in Indonesia and Thailand, the region’s biggest economies.
The finance ministry said in a statement dated Aug. 24 that it would await opinions on the short-selling plan from stakeholders before making a final decision.
Vietnam’s two stock exchanges will then draft a list of eligible equities based on market capitalisation, earnings performance and liquidity.
Vietnam’s benchmark stock index closed down 0.07% on Wednesday to 873.47. (Reporting by Phuong Nguyen; Editing by Martin Petty)
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