The Government needs to enlarge the scale of the market and lure more State-owned enterprises to list shares through speeding up their equitisation.
(Photo: nhadautu.vn)
Hanoi (VNA) - The Government needs to enlarge the scale of themarket and lure more State-owned enterprises to list shares through speeding uptheir equitisation, according to Luu Trung Thai, Vice Chairman of the MilitaryCommercial Joint Stock Bank.
Such a move would improve thesustainability of the securities market in 2018, he said at a meeting on January22.
However, the market’s total capitalisation,which was equal to 75 percent of the country’s total gross domestic product(GDP), is far lower compared to other markets in the region, he added.
For example, the figures for Thailand,Singapore and Hong Kong – three of the biggest markets in Asia – are 103 percent,215 percent and nearly 1,000 percent, respectively, Thai said.
Though the size of the securities marketdoubled on a yearly basis in 2017 and became more attractive to investors, thebanking system remained the most important channel for the Vietnamese economyto raise funding and capital, he said.
“In comparison, the total credit of thebanking system in Vietnam now accounts for 130 percent of GDP, double that ofthe stock market. This means that the channel for capital to the economyremains heavily dependent on the banking system,” he said.
Thus, he proposed the two stock exchangesshould be merged and the post-merger market regulator should be divided intovarious specialised units in various industries while the legal system must becompleted to improve the transparency of corporate information disclosure.
Vietnam’s securities market will improvethis year as domestic investors have become more professional with theirinvestment decisions and more foreign investors are attracted to the localmarkets, vice chairman and CEO of the Vietnam Investment Fund (VFM) Tran Thanh Tan,said during an interview on the sidelines of the meeting.
Tan said better macroeconomic conditionswill also support the securities market in 2018, especially the Government’sefforts to equitise and privatise SOEs and bring them to the securities market.
“The size of the securities market canaccount for 100 percent of the country’s GDP in 2018,” he said. “As theGovernment puts more SOEs with high-quality assets for sale, more investorswill participate in the market.”
According to Deputy Prime Minister Vuong DinhHue, the Government plans to offload its ownership in 245 SOEs in 2018 with thevalue being 6.5 times the figure earned through 2017.
Deputy Minister of Finance Tran Xuan Hasaid challenges have remained for Vietnamese securities in 2018.
He said that the Law on Securities must beamended to replace the current regulation and the new one must be submitted tothe National Assembly for review at its second meeting this year.
The development of the new securities lawis expected to resolve the imbalance between the stock and the bond markets andbetween the government and corporate bonds, Ha said.
“We hope the associations and the marketmembers in collaboration with the State Securities Commission and the Ministryof Finance to build this law has the results," he said.
Draft margin lending policy
The draft margin lending policy thatrequires initial margin ratio contracted by securities firms for margin lendingto be increased to at least 60 percent, from the current 50 percent, could takeeffect in early March instead of February, the State Securities Commission(SSC) chairman Tran Van Dung said.
The SSC had delivered a survey amongbrokerage firms, organisations and market regulators on the new policy, hesaid. “By the end of Friday [January 19], the SSC had received 32 of 51surveyed securities firms. Those that has not given their feedback, the SSCwill consider them agreeing to the draft policy.”
Of the 32 companies that have sent feedbackon the draft policy, 22 firms agree with the draft regulation and the remaining10 disagree. Therefore, the draft policy could be realised, Dung said, addingthat the 22 companies account for 80 percent of the market share for marginlending activity.
Foreign investors record 1.23 billion USD innet buy value
According to the State SecuritiesCommission (SSC), foreign investors in 2017 recorded a decade-high net buyvalue of 28 trillion VND (1.23 billion USD) in 2017 and the figure is expectedto rise in 2018.
The total of foreign net buy value forbonds reached 18.7 trillion VND, or 825 million USD.
Total value of foreign asset portfolios in2017 reached 32.9 billion USD, a yearly increase of 90 percent, proving that foreigninvestors are very keen on the prospects of the local securities market.
Again, the figures are expected to increasein 2018.
In January 2018 alone, foreign investorsremained net buyers in all trading sessions of the month with total netpurchase value of 7.2 trillion VND, focusing on food and beverage,banking-finance and real estate sectors.
As the domestic securities market has shownbig improvement, brokerage firms estimate their earnings in 2018 will getbetter than the previous year.
The net profit of the entire brokerageindustry for 2017 is estimated at 7 trillion VND, twice the figure recorded in2016.
Such a big improvement is attributed to thegrowth of the market in both size and product quality.
The benchmark VN Index has increased bytotal 63.5 percent since the end of 2016 to a decade-high of 1,087.42 points atthe end of January 22.
The total market capitalisation has risento 3.8 quadrillion VND (168.9 billion USD), equal to 77.2 percent of thecountry’s total GDP, and market trading liquidity has gained 90 percent to 9.6trillion VND each session compared to last year’s average daily figure. - VNA
VNA
