April 06, 2020 23:56

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Bond market proves efficient capital mobilization channel

17:42 | 30/07/2019

Vietnam’s bond market became a magnet for capital inflows during the first half of 2019, while the stock market fell short of expectations.

bond market proves efficient capital mobilization channel

Illustrative photo. (Source: Internet)

Local securities exchanges saw liquidity drop, as the trading volume reached only 220 million stocks per session while the average stock value posted VND4,500 (US$19.35 US cents), rising annually by 27 per cent in volume and 44 per cent in value, respectively.

Meanwhile, the corporate bond market thrived during the six-month period. As much as VND89.483 trillion (US$3.84 billion) were raised via corporate bond issuance, equivalent to 134 per cent of the figure seen in the corresponding period last year.

By June 24 2019, the corporate bond outstanding represented 10.22 per cent of the country’s 2018 GDP, higher than the 8.6 per cent ratio seen at the end of 2018.

As many as VND102.373 trillion (US$4.4 billion) were mobilized from the issuance of Government bonds (G-bonds) by June 21, or 33.4 per cent of the figure set for 2019.

According to the Ministry of Finance, the proportion of G-bond holders has improved with non-banking financial institutions occupying 53 per cent of the total G-bonds issued, a slight rise of 0.8 per cent against the end of 2018.

Analysts noted that growing concerns about ongoing trade disputes and subsequent adverse impacts on the global growth had led to the withdrawal of capital from high-risk investments such as securities, thus hampering stock markets worldwide.

Domestically, the State Bank of Vietnam has pursued tight credit growth and closer watch of capital inflows into risky fields such as real estate and securities, thereby raising concerns about relevant risks.

Some analysts voiced their opinions that the slowdown of the domestic securities market was caused by a number of investors seeking higher profits from other investment channels, namely gold bars and bank deposits.

Others noted that investors have been hard-pressed to outline explicit investment strategies as most potential stocks have reached the peak while allegedly profitable stock codes of firms operating in the fields of apparel, aquatic product processing, and export, are posing high risks.

Despite this, experts have placed high hopes on the securities market that would remain the most significant magnet, elaborating that investors are waiting for better chances to purchase more stocks.

Source: VOV