What to expect from returning to a 10-share minimum lot?

The institutional investors are trending to become net sellers instead of individual investors.

Over the past times, the massive influx of individual and institutional investors into the Vietnam stock market led to overloading on HoSE. So, HoSE had to increase the minimum trading lot from 10 to 100 shares and temporarily change the listing of some stocks from HoSE to HNX or limit  cancellation or correction of orders to avoid order congestion. However, the latter did not improve much. 

With FPT's technical support, the new trading system of HOSE has returned to stable operation. Therefore, it is no longer appropriate to apply a minimum lot of 100 shares to reduce the overload on the system as before.

Recently, Deputy Minister of Finance Nguyen Duc Chi said that the Ministry had directed the State Securities Commission of Vietnam to reduce the minimum trading lot on HoSE to 10 shares.

Mr. Nguyen The Minh, Chief Analyst of Yuanta Securities Vietnam, said that the return to the 10-share trading lot would have three positive impacts on the Vietnam stock market.

First, it will stimulate the cash flow back to the stock market, making the market liquidity more abundant. However, the liquidity increase will not be significant compared to before raising the minimum lot to 100 shares.

Second, when raising the minimum lot to 100 shares, many individual investors, amateur investors are not eligible to invest in stocks with over VND 100,000 a share. Thus, when returning to a minimum trading lot of 10 shares, these investors will have the opportunity to buy more stocks with high market prices.

Besides, when coming back to minimum lots of 10 shares, a stock price could fluctuate bigger than before, so the stock market will be more exciting.

Third, many countries are trending to reduce the minimum trading lot to a low level. The future stock market in developed countries even could limit  no minimum lot to attract more individual investors to the stock market.

In recent years, institutional investors are trending to be net sellers instead of individual investors. So this is a better condition to attract new cash flow to the stock market.