April 05, 2020 20:04

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Vietnam’s stock market: A bright spot in Southeast Asia

19:14 | 08/01/2020

VCN- In 2019, Vietnam's stock market recorded the highest increase in Southeast Asia with growth in many aspects.

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In 2019, the liquidity in the stock market reached VND 4,659 billion per session.

Growth in both size and quality

Last year, although the political, economic and international financial situation was complicated, it was supported by the stability of the domestic macro-economy and the drastic direction of the Government and the Ministry of Finance. Vietnam's stock market in 2019 still maintained growth in many aspects and is still an attractive destination for foreign investment inflows.

According to a report of the State Securities Commission (SSC), at the end of the year, the VN-Index reached 960.99 points, an increase of 7.7 percent compared to the end of 2018, higher than other countries in the region. Market capitalization increased sharply and reached 4,384 trillion VND, up 10.7 percent compared to the end of 2018, equivalent to 79.2 percent of GDP in 2018 and 72.6 percent of GDP in 2019.

“Within 5 years, beginningwith only one enterprise with market capitalization of over 1 billion USD, now this number is over 30 enterprises listed on two Stock Exchanges. With the current market capitalization scale, Vietnam's stock market has been playing an important role in mobilizing medium and long-term capital for economic development,”said the State Securities Commission.

The statistics showed that, in 2019, the liquidity in the stock market reached VND 4,659 billion per session, down 28.8 percent compared to the average in 2018. The liquidity of Vietnam's stock market was low due to concerns about international trade instability, especially escalating US-China trade tensions,

Along with that, the number of investors'accounts continued to increase, reaching more than 2.36 million, an increase of 8.1 percent compared to the end of 2018, of which the number of foreign investors' accounts increased 12.8 percent.

By the end of November, the total number of currently active trading codes was 32,762, of which 28,239 were trading for individual investors and 4,523 were for institutional investors, up 11.2 percent in the number of organizations and 14.2percent in the number of individuals over the same period in 2018.

Regarding the operations of listed companies on the stock market, in the first 9 months of 2019, there was an improvement in both revenue and profit, up 11.1 percent and 13.3 percent respectively over the same period last year. However, interest expenses in the third quarter of 2019 increased by 15percent and financial expenses increased by 2.1 percent, of which the real estate industry had the highest interest and financial expense costs. In general, the business results of companies among industries and in the same industry have a big difference in revenue and profit. In particular, leading enterprises in the real estate, finance, insurance, and banking groups achieved better results than companies in other industries. Business results of manufacturing enterprises are showing signs of slowing down, in part due to the impact of external factors such as the globaleconomy's decline and prolonged US-China trade tensions.

Notably, in the past year, the bond market in 2019 continued to grow well, meeting the demand for capital mobilization for the Government, and at the same time helping businesses expand production.

According to the State Securities Committee(SSC), although the derivatives market has been officially in operation for just two years, there has been a very good and stable growth. To date, the derivatives market has had two products, a futures contract on the VN30 index and a 5-year government bond futures contract. The number of derivative trading accounts by the end of 2019 reached 90,860, up 58 percent compared to the end of 2018.

Continue to improve legal institutions

The highlight of the past year is that the management agency has significantly improved legal and policy institutions. The SSC has proactively developed and finalized the legal framework for the securities market, typically the amended Securities Law, which was officially passed by the National Assembly.

The (SSC) has also submitted to the Government a proposal to restructure the securities and insurance market until 2020; and submit the Ministry to put into transaction two new products.

The SSC also continues to restructure the stock market, strengthen the management of public companies and intermediaries. The inspection, supervision and handling of violations have been strengthened and made stricter in the context of increasingly sophisticated and complicated securities violations.

Mr. Tran Van Dung, Chairman of the State Securities Commission, said that to promote Vietnam's stock market to continue developing, promoting the position and role of the securities market in mobilizing and allocating effective capital sources. As a result, the SSC wants the units to strengthen coordination and support the SSC in completing the Decrees and Circulars guiding the Securities Law 2019; finalize the plan to organize the corporate bond trading system; accelerate the process of merging the two Stock Exchanges and establishing the Vietnam Stock Exchange; deploying equitization plan and divesting state capital.

In 2020, the SSC will also focus on a number of key tasks such as developing legal documents, guiding the implementation of the Securities Law; implement solutions to develop and improve the capacity of the system of market intermediaries; improve the efficiency of securities market management and supervision and strictly handle violations; build an integrated, modern and integrated infrastructure, system for the entire Vietnamese stock market.

By Thuy Linh/ Bui Diep