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Mr. Vu Bang reports the situation of the stock market in the first 8 months of 2016. Photo: Thuy Linh.

High growth rate

According to the State Securities Commission, despite the negative impact of the world economic situation, Vietnam's stock market has recovered quickly and maintained high growth rate. The VN Index has reached a peak for 8 years (since May 2008) with a strong liquidity and the market capitalization has reached its highest level for 6 years. Thus, Vietnam's stock market is considered as one of the top 5 world market with the highest growth and profitability in the second quarter of 2016 in Southeast Asia.

Regarding results of the stock market operations in the first 8 months of 2016, Mr. Vu Bang, chairman of the State Securities Commission said that by August 23, 2016, the VN-Index had increased by 13.8%; and the HNX-Index increased by 4% compared to that at the end of 2015. The level of market capitalization reached 1,590 billion vnd, equivalent to 38% of GDP (an increase of 17% compared to that the end of 2015). The market liquidity also increased and the average transaction of a session reached nearly 6,200 billion vnd. This figure in an increase of 25% over the previous year, particularly with the government bond transactions increasing by 34% and stock transactions increasing by 16% over 2015.

Regarding the mobilization of capital and the equitization, Mr. Vu Bang said that the mobilization of capital in the first 7 months of 2016 increased by 81% (nearly 254.5 billion vnd); the equitization auction for 58 State Owned-Enterprises was 5,291 billion vnd with a rate of 66%.

According to Mr. Vu Bang, the reason for these outstanding results was that the Government continuously transmitted positive messages to support businesses, improved the business environment and built an effective system of administration services.

Although the growth slowed down, there were some positive factors, specifically: the industrial production situation in the first 6 months of 2016 increased by 7.5% over the same period last year; the PMI Index of the manufacturing sector in May and June was above 52 points; and FDI inflows increased dramatically with registered capital of more than $US 12.9 billion, etc. In addition, the operation of listed companies improved over the same period, with an increase of revenue of 6.8%. Moreover, a series of restructuring measures to remove difficulties for enterprises and measures to support the market, as well as develop new products have been implemented.

Mr. Vu Bang said that, recently, the State Securities Commission has shortened the payment period to “T+2”, allowing the opposite transaction in the first session; and coordinating to develop pension funds in order to create sustainable demand for the market. The State Securities Commission is currently implementing measures to improve the market grade. Basically, the State Securities Commission has sought some solutions for important criteria such as: Loosening rules, simplifying the registration, opening accounts for foreign investors and encouraging disclosure of information in English, etc.

The State Bank will be responsible for the Government bonds payment

Currently, the State Securities Commission is cooperating with the State Bank to implement schemes to transfer the function of the Government bonds payments from commercial banks to the State Bank. In addition, in order to develop corporate bonds, the State Securities Commission is coordinating other relevant units to build a legal framework for corporate bonds and a complete infrastructure of the trading market, supporting liquidity and market information, etc.

In the near future, the State Securities Commission will promote the equitization and divestment of the State-owned enterprises; provide additional sanctions for State-owned enterprises without equitisation or delays to list and register transactions. Also, the State Securities Commission will improve the quality of listed shares by improving the quality of corporate management, risk management and enhancing transparency in the stock market.

The State Securities Commission will also diversify the Government bonds to promote the development of products of floating-rate bonds and focus on the “repo” bond with diversified investors on the basis of the system of primary bond trading.

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Notably, Mr. Vu Bang said that the State Securities Commission proposed the Government to issue a Decision establishing the Vietnam Securities Exchange. Along with the model of partnership, the State Securities Commission will implement the project to connect the system of securities settlement with the bank payment system. Then, the State Securities Commission will also complete the change of the Government bonds payment function from commercial banks to the State Bank.