Responding to malicious rumours on the stock market

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The seminar. Photo: Thuy Linh.

Small investors often have the psychology of the multitude

Speaking at the Online Seminar on Security in the field of securities held on May 15, Director of Securities Market Surveillance Department, the State Securities Commission, Nguyen The Tho said, the information is a very important channel that affects the psychology of everyone in the securities sector.

"Rumours exist in all markets, when the stock market is still young, rumours are likely to easily spread. Rumours can convey information that has not been proved to be true by word of mouth, social networks and technology. Thus, they have a wide spread, they can stem from an event or can be created from a group of individuals to cause abnormalities in the economic field”, said Tho.

Clause 4, Article 9 of the Law on Securities stipulates that act of manipulating securities prices is one of the prohibited acts, detailed as follows: Conniving in buying or selling securities in order to create sham supply and demand; trading in securities by mode of colluding with or enticing others to continuously buy and sell securities back and forth to manipulate securities prices; combining or employing other trading modes to manipulate securities prices.

Tho said, in developed countries, rumours are a way for a group of people to take advantage of the market when considering market manipulation acts. With such acts, the surveillance agencies at the Stock Exchanges will develop a specific surveillance criteria to monitor ordering, cancelling of orders to identify acts of violations.

However, the lack of transparency makes rumours easily affect investor sentiment. “Vietnam's stock market is still young with a large proportion of individual investors. These are investors who often follow movement and have the psychology of the multitude and are easily affected by rumours. While institutional investors have more channels to collect information, have teams to analyse, verify and assess information,” said Nguyen The Tho.

Provide information to respond to rumours

Economic expert Nguyen Trong Nghia said that rumours are also a kind of information and a "medicine" to treat rumours is information. "The information must come at the right time, right case. There must be timely information from the listed companies, trading floors and management agencies. Rumours are information that must be treated as information. Blocking information, information of unknown origin and lack of feedback will push the story away.”

According to Deputy Director of Listing Management Division, Hanoi Stock Exchange, Doan Thai Ly, when rumours appear, if the companies keep calm, they will handle rumours quickly and reasonably, this will reassure the market and investors and solve the rumours. If the interest of company leaders is insufficient, rumours can become a problem.

“Normally, companies have responded to rumours in a timely fashion by immediately submitting explanations and reports to management agencies. We use these explanations and reports, combined with operations of the Stock Exchanges to report to the State Securities Commission," Ly said.

The Representative of the State Securities Commission affirmed that those who directly relate to the rumours must have a timely response to solve malicious rumours.

“Supervisory agencies of market participants under the Securities Business Law are responsible to require listed companies to disclose extraordinary information and periodic information. When rumours appear, the State Securities Commission requests the Stock Exchanges where companies are listed, to disclose information, give coordination information, or organize dialogues in a timely manner to pacify investors. Public companies need to coordinate with the management agencies to verify information. The investors should use the verified information,” Tho recommended.

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Vice Chairman and Secretary General of Vietnam Association of Securities Business, Nguyen Thanh Ky, explained to make the stock market transparent and avoid malicious rumours, the State Securities Commission should be more closely coordinated with its members because the stock market is a market of trust, and more importantly, it is a market attached to the economy, its health reflects the economy’s.

For investors, Ky recommended investors to be confident, listen, learn and make wise investment in accordance with the law.