IPOs needed to improve market

Such a move would improve the sustainability of the securities market in 2018, he said at a meeting on January 22.

However, the market’s total capitalisation, which was equal to 75% 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%, 215% and nearly 1,000%, respectively, Thai said.

Though the size of the securities market doubled on a yearly basis in 2017 and became more attractive to investors, the banking system remained the most important channel for the Vietnamese economy to raise funding and capital, he said.

“In comparison, the total credit of the banking system in Vietnam now accounts for 130% of GDP, double that of the stock market. This means that the channel for capital to the economy remains heavily dependent on the banking system,” he said.

Thus, he proposed the two stock exchanges should be merged and the post-merger market regulator should be divided into various specialised units in various industries while the legal system must be completed to improve the transparency of corporate information disclosure.

Vietnam’s securities market will improve this year as domestic investors have become more professional with their investment decisions and more foreign investors are attracted to the local markets, 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 conditions will also support the securities market in 2018, especially the Government’s efforts to equitise and privatise SOEs and bring them to the securities market.

“The size of the securities market can account for 100% of the country’s GDP in 2018,” he said. “As the Government puts more SOEs with high-quality assets for sale, more investors will participate in the market.”

According to Deputy Prime Minister Vuong Dinh Hue, the Government plans to offload its ownership in 245 SOEs in 2018 with the value being 6.5 times the figure earned through 2017.

Deputy Minister of Finance Tran Xuan Ha said challenges have remained for Vietnamese securities in 2018.

He said that the Law on Securities must be amended to replace the current regulation and the new one must be submitted to the National Assembly for review at its second meeting this year.

The development of the new securities law is expected to resolve the imbalance between the stock and the bond markets and between the government and corporate bonds, Ha said.

“We hope the associations and the market members in collaboration with the State Securities Commission and the Ministry of Finance to build this law has the results," he said.

Draft margin lending policy

The draft margin lending policy that requires initial margin ratio contracted by securities firms for margin lending to be increased to at least 60 percent, from the current 50 percent, could take effect in early March instead of February, the State Securities Commission (SSC) chairman Tran Van Dung said.

The SSC had delivered a survey among brokerage firms, organisations and market regulators on the new policy, he said. “By the end of Friday [January 19], the SSC had received 32 of 51 surveyed securities firms. Those that has not given their feedback, the SSC will consider them agreeing to the draft policy.”

Of the 32 companies that have sent feedback on the draft policy, 22 firms agree with the draft regulation and the remaining 10 disagree. Therefore, the draft policy could be realised, Dung said, adding that the 22 companies account for 80% of the market share for margin lending activity.

Foreign investors record US$1.23 billion in net buy value

According to the State Securities Commission (SSC), foreign investors in 2017 recorded a decade-high net buy value of VND28 trillion (US$1.23 billion) in 2017 and the figure is expected to rise in 2018.

The total of foreign net buy value for bonds reached VND18.7 trillion, or US$825 million.

Total value of foreign asset portfolios in 2017 reached 32.9 billion USD, a yearly increase of 90 percent, proving that foreign investors are very keen on the prospects of the local securities market.

Again, the figures are expected to increase in 2018.

In January 2018 alone, foreign investors remained net buyers in all trading sessions of the month with total net purchase value of VND7.2 trillion, focusing on food and beverage, banking-finance and real estate sectors.

As the domestic securities market has shown big improvement, brokerage firms estimate their earnings in 2018 will get better than the previous year.

The net profit of the entire brokerage industry for 2017 is estimated at VND7 trillion, twice the figure recorded in 2016.

Such a big improvement is attributed to the growth of the market in both size and product quality.

The benchmark VN Index has increased by total 63.5% since the end of 2016 to a decade-high of 1,087.42 points at the end of January 22.

The total market capitalisation has risen to VND3.8 quadrillion (US$168.9 billion), equal to 77.2% of the country’s total GDP, and market trading liquidity has gained 90% to VND9.6 trillion each session compared to last year’s average daily figure.