Capital Markets
From The Report: Vietnam 2017
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With economic growth, solid corporate earnings and a rising need for financing among domestic companies boosting stock markets and stimulating private equity activity, Vietnam’s capital markets have grown steadily in recent years. A wave of equitisation of state-owned enterprises is boosting the sector further, while a growing range of indices are broadening options for investors. A new unified index for both of Vietnam’s bourses – the Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange – may presage a long-awaited merger, and support further product diversification.
This chapter contains interviews with Vu Bang, Chairman, State Securities Commission; and Trinh Thanh Can, CEO, ACB Securities.
Articles from this Chapter
Market makers: Regulatory changes and new options are boosting activity and foreign investment
Market minded: Vu Bang, Chairman, State Securities Commission (SSC), on developing and integrating Vietnam’s capital marketsOBGplus
Interview: Vu Bang How would you rate the progress in the development of the country’s capital markets? VU BANG: Vietnam has gradually integrated international standards. Nearly 10 years after the global financial crisis of 2008-09, which affected both the global economy and Vietnam, we have managed to upgrade our financial system by restructuring our capital markets. After 2008, the government passed the rule to apply Basel II standards for book reform, and also passed decision 1826 to restructure…
Coming up: The Unlisted Public Company Market sees a huge increase in listings as companies use it as a springboard to the main marketOBGplus
The Unlisted Public Company Market (UPCoM) on the Hanoi Stock Exchange (HNX) is effectively a mezzanine exchange, set up to encourage unlisted firms to participate in the securities market, with a view that those on UPCoM may later transfer onto the main market. UPCoM brings a number of benefits to investors. Transactions, clearance and settlement are all carried out through a centralised system, and investors are protected by a legal and regulatory framework. The exchange also has high standards…
Frontier justice: Trinh Thanh Can, CEO, ACB Securities, on the liberalisation of the country’s capital marketsOBGplus
Interview:Trinh Thanh Can What effects can we expect from new regulations in Vietnam, such as Decree 60? TRINH THANH CAN: Decree 60 is a legal breakthrough that relaxes the foreign ownership limit for listed companies. It was expected to encourage new foreign institutional investor funds to invest in the listed market and help upgrade the Vietnamese equity market. It showed the government’s determination to open up the capital market, but it was not a complete legal solution. Listed companies…
Attractive yields: BondsOBGplus
When mentioning Vietnam’s capital market, most investors think of the VN-Index and the privatisation of state-owned enterprises, forgetting a promising fixed-income market. Vietnam’s debt market is larger than the equity one, and debt financing remains a major source of funds in Vietnam. Unlike equity market, the fixed-income market offers sizeable investment opportunities, professional local participants and market resilience. High Returns Government bonds (G-bonds) are worth around VND900trn ($40.3bn), and weekly transaction volume is $2bn. Local commercial banks are major participants in this market, as foreign investors do not hold…
Fuelling growth: InvestmentOBGplus
In order to maintain the exceptionally good growth rate of around 6.5% in 2017-20 and successfully restructure the economy, Vietnam needs $250bn of investment, equivalent to approximately 25% of GDP, in the period. Foreign direct investment (FDI) and the public sector have historically accounted for 25% and 35%, respectively, of total investment. In recent years FDI disbursement has become increasingly important in total investment and GDP growth. Given the disbursement schedule, FDI might account for 30% of investment demand, equivalent to 60% of the current undisbursed FDI registration. The public sector, however, has limited investment capacity,…
Changing landscape: Real estateOBGplus
Vietnam has an exceptionally high GDP growth rate, but the prosperity has not spread across the country. GDP per capita in the two biggest cities, Ho Chi Minh City and Hanoi, reached $2000 in 2007 and 2010, respectively, in each case marking the first boom in real estate. Since then, GDP per capita has increased by 13% per year in both cities, while the population has increased at a compound annual growth rate of around 3%. Since then, the economies of these two cities has quadrupled, with an emerging middle class of 3m households. Real estate prices in central Hanoi and Ho Chi Minh City increased by 3-4 times in the period, while land prices…
Turning point: Banking sectorOBGplus
Commercial banks have traditionally been the main suppliers of funding in Vietnam, since bank deposits remain the most popular form of investment for Vietnamese households. Even though credit growth has cooled as the government prioritises macroeconomic stability, the compound annual growth rate of 14.2% recorded in the 2011-16 period is significant even in a fast-growing economy like Vietnam. In the coming years credit growth may be around 15-17%, and banks’ core earnings are likely to rise at an even faster rate. Beside interest income, Vietnam’s commercial banks also generate non-interest income. This revenue stream is currently quite…
