A lot of potential for Vietnam's stock market

Mr. Steve Brown, Senior Manager of Institutional Customer Bloc in Viet Capital Securities Company (VCSC).

Could you give your comments about the transformation of Vietnamese securities companies in recent years?

About 15 years ago, Vietnam capital market recorded a daily transaction value of below $US 100,000, with only about 20 listed companies, and market capitalization under $US 150 million.

Most investors were Vietnamese and often dealt with the short-term cycle. Currently, thanks to the efforts of the State Securities Commission, the stock market and all market participants and investors are able to deal with nearly 700 companies on the 2 trading floors now, the number of branches and investors are increasing day by day.

Looking at the statistics of the current market, it is likely that we have two trading floors with nearly $US 60 billion of market capitalization, daily trading value is about $US 100 million.

This is an incredible progress compared to the beginning. However, the proportion of Vietnamese citizens in stock investment being only around 5% now shows the tremendous growth potential of the market in the future.

So, are investment opportunities in Vietnam market wide open?

Vietnam is a very potential destination at the moment. The special attraction of foreign investors in Vietnam is monetary stability, political stability, a growing capital market, government divestments in the industry are appreciated, labor productivity and efficiency of citizens working in Vietnam is increasing.

Vietnam can provide manufactured goods, exports of rubber, coconut, agriculture products and aquaculture cultivation; information technology services... All these factors create solid and long term opportunities for investors.

Some foreign banks in Vietnam such as Shinhan (South Korea), ANZ (Australia) have established branches in Vietnam, the national investment funds invested in Vietnam banks such as the Government of Singapore (GIC) invested to acquire7.7% capital of Vietcombank.

Vietnam is also considering very carefully about promoting restructuring the State sector. This means that the participation of foreign investors has been expanded. The divestment plan of SCIC is taking place. The latest is the announcement of selling 9% of Vinamilk shares.

This emphasizes the importance of the stock market, allows investors to participate in these opportunities transparently and efficiently.

And next time, we will see that more and more foreign banks expand their services– we will see activities in the form of transaction offices or offering basic banking services – in order to provide mutual funds, comprehensive financial consultancy and securities brokerage services.

Sharing investment consultancy, retirement consultancy and mutual fund products... will be provided by most of the banks operating in Vietnam in the coming time. And at that time, VCSC will be an ideal place to offer these services to customers.

With long time working in companies around the world and particularly with management experience in 3 largest security companies in Vietnam, according to your opinion, what are interests of foreign investors to invest in the Vietnam market?

Foreign investors expect to be treated under international standards. They want to directly access the market, the latest technology, the best execution policies and good market research. The majority of international clients and even domestic ones don’t have much time to research the market, while they desire greatly to communicate with brokers and researchers, consider investment opportunities, order to buy/sell – safely.

In addition, all domestic and international customers need full support from trading account opening, in accordance with the requirements of the transaction and private investment management of clients. The international customers desire support and advice according to international standards.

So what are factors to help foreign investors come to VCSC?

The VCSC customers come from places over the world. At VCSC, systems of Bloomberg EMSX FIX, OMGEO and Portware support customers’ transactions very professionally, customer support services in accordance with ethical standards and transparency, similar with companies operating in other markets.

VCSC owns the dynamic enterprise customers relation section, specializing in organization meetings between clients with listed companies and private companies, as well as organizing seminars and Road Shows (investment opportunity introduction).

Recently, VCSC has supported the Agricultural Corporation GTN Foods (HSX: GTN) to organize a Road Show in Singapore, help GTN Foods mobilize $US 60 million successfully through private share placement to domestic and international investors. We are also supporting the PetroVietnam Oil Corporation (PV Oil) – the second enterprise of oil consumption in Vietnam – to find strategic foreign investors in Singapore and Hong Kong.

According to the equitization plan, PV Oil will perform IPO in the coming time and VCSC is the consultant and searches strategic foreign investors for PV Oil.

We have been organizing the investment conference Vietnam Access Day (VAD). This is the biggest event in the investment industry which has been held annually in Vietnam since 2012. In 2016, VAD attracted more than 570 investors.

Approximately 40% of these investors come from other countries, it is clear evidence for the possibility of VCSC in introducing Vietnam capital markets to the international investment community. In the first 6 months of 2016, the foreign brokerage market share of VCSC was over 30.76% on HOSE, top of the market.

The winning of the award “Best Investment Bank in Vietnam”, “Best Consulting and Capital Mobilizing Company in Vietnam (2016)” by Finance Asia magazine, “Best Vietnam Capital Mobilizing Company in stage 2007 – 2016” by Alpha Southeast Asia magazine,... shows that the business model of VCSC committed to applying international standards in customer service is recognized by customers as well as the international media.

With the great potential of the stock market, will the securities companies in general and VCSC in particular continue to grow strongly in the future?

The Vietnam stock market has strong prospects and great adaptability to change. The domestic security companies are waiting for other additional service products from management authorities, and when these products appear, including the mass products, such as pension funds of Vietnam's workers in security investment, will increase the participation rate of investors in the capital market.

The market is developing in the right direction and continuing to grow under Government support. The State Securities Commission focuses on providing products to the market, orienting market operation efficiently, transparently, and operating in favor of all stakeholders.

According to the statistic of the State Securities Commission, there are 79 security companies operating in Vietnam’s stock market (figure at the end of September, 2016), which means a wide-open competition environment for companies. VCSC will make every effort to ensure the advantages of our market share, as well as continuing to apply international standards of professional ethics, professional services... for serving our customers.

Which field are interested to invest in the coming year, according to your predictions? In the remaining months of 2016 and through 2017, I believe that the Government will continue to control inflation, while participating in initiatives to build the current competitiveness of our country in the region.

Government policies have created strong export competitiveness, such as the trade surplus reached $US 2.87 billion in August compared to the beginning of the year, it highlighted the nation to become the top of the regional FDI. In particular, the FDI flow into Vietnam reached $US 10 billion by August, up 8.9% impressively.

Manufacturing is the most popular FDI sector - from textiles to high technology - and this trend is likely to continue. FDI investors look at Vietnam as a place for exporting and a domestic market for importing - due to the wage increases and the freedom spending possibility of citizens.

Government follows credit growth closely (consumption finance loan); low inflation and high GDP growth of Vietnam will continue to make Vietnam become an investment destination of choice for institutional clients.