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Vietnam's state investment arm pledged to buy shares in an unprecedented attempt to halt a dramatic drop in stock markets Thursday, helping the benchmark index rally from a 16-month low.
The measure was one of a series of initiatives outlined in a government policy document late on Tuesday designed to fight double-digit inflation and restore local retail investor confidence in a market that has lost about 34 percent this year in a liquidity crunch.
The State Capital Investment Corporation, which has registered capital of VND15 trillion (US$940 million), had not started buying back shares yet, brokers and traders said.
"For SCIC to really put money in the market it would take days because of their complicated investment procedures that require a series of approvals," one trader said.
Domestic retail investors who dominate trading have bailed out in the past month following a series of central bank directives to banks that dried up liquidity.
The central bank is grappling with policies to reduce inflation that hit 15.7 percent in February, the highest in 12 years.
SCIC officials could not be reached, but its Web site (www.scic.vn) posted a statement saying it was "urgently identifying a list of investment portfolios, size and methods of the investment in compliance with the government's directive for implementation."
The statement said the move was subject to final government approval and that the site would be updated with information.
SCIC has a portfolio of about 800 companies and major corporations, both listed and unlisted.
They include stakes in top information technology firm FPT, top dairy product maker Vinamilk, reinsurance firm Vinare, construction group Vinaconex and Pacific Airlines.
Earlier, a senior official of the State Securities Commission, the market watchdog, said SCIC would "immediately" buy back shares.
"SCIC's shares purchase is a suitable solution given the current conditions and could provide positive support to the market," Nguyen Doan Hung, Deputy Chairman of the State Securities Commission said in a statement.
The main Ho Chi Minh Stock Exchange, with a market cap of about $16.5 billion, climbed 4.8 percent to close at 611.17 points on the news, having fallen by as much as a third in the past month alone.
The smaller $5.3 billion over-the counter Hanoi Securities Trading Center jumped 7.9 percent to 206.49 points.
The Ho Chi Minh exchange is the worst performing in the world this year and has fallen almost three times as much as MSCI's Asia excluding Japan index.
