12 February 2019 or 8th of the Ky Hoi 2019 Tet Holiday, Vietnam’s stock market receives the good news when Prime Minister Nguyen Xuan Phuc beats the gong to open the New Year’s trading session.
The PM also put the message of sustainably developing the stock market across the Minister of Finance, State Securities Commission of Vietnam and market participants.
In his speech, the PM states that the Vietnam’s stock market has been increasingly growing, actively contributing to the development of domestic economy in general and financial market in specific. The stock market proves to be an important domestic and international capital mobilization channel for Vietnam’s economy. Stock market capitalization has increased nearly 17-fold over the past 12 years from 22.7% of GDP in 2016 to 72% of GDP in 2018.
Capital mobilization in the private sector through the issuing stocks and corporate bonds increased by 70% in 2017 and over 30% in 2018 amounting to VND 86 trillion (USD 3.7 billion), which turns Vietnam into one of the Southeast Asian countries with the largest amount of capital raised through stock exchanges.
Via the stock market, the Government has mobilized capital at term of 20-30 years, gearing up long-term capital for public investment and public debt restructuring. The stock market has also laid a solid foundation for the success of leading companies; supported the privatization process of state-owned enterprises; and above all, together with the banking system, created a more balanced, efficient capital market, supporting the domestic economy’s development.
Especially in the Ky Hoi Lunar New Year’s trading session opening speech, the PM has spread the message of sustainable developing the stock market.
The PM stated that the Government would press on with improving the investment and business climate, stabilizing the macro-economy, reforming the growth model and considering the private sector as a key driving force for economic development. Thus, he highlighted the critical importance of sustainably developing the stock market and promoting its role in creating medium and long-term capital for the economy, improving growth quality and enhancing the economy’s transparency.
The PM also explicitly addressed some shortcomings of the stock market in a concerted effort to find ways of developing the market. These include small market scale, especially corporate bonds, improved-but-still-low transparency, limited market discipline and compliance, delayed listing of equitized companies, unprofessional investors mainly individual investors that causes herb mentality, substantial spreading risk, limited ability to confront with external factors and inadequate supervisory capability.
The PM further underlined that one of the important things-to-do of the stock market is to have better measures in place to protect minority investors. Vietnam currently ranks 89th out of 190 countries and territories, which is not in line with the economy’s GDP index and much lower than other countries in the region.
The PM specifically require the Minister of Finance and State Securities Commission of Vietnam to promote greater international cooperation related to securities sector with view to developing stock market regulation, training and human resource policies; cooperating and sharing information to monitor, inspect and address cross-border violations; recommending development of frameworks to implement international conventions; and adequately and effectively engaging in international organizations and securities commissions’ activities.
The PM called for greater inspection, monitoring and settlement of violations to ensure discipline and compliance in the stock market; and build up trust among public and investors, which enables stable and sustainable development of the market. He further requested more severe sanctions for price speculation, insider trading and non-disclosure or inadequate disclosure. It is also expected to make the stock market gain in popularity among public, not being considered as a gamble as the term “playing stocks” suggests but a secured and effective investment instead. Many people hesitate to invest in the stock market as they do not believe it as a reliable and secured investment. The stock market with short-term investors only will not be able to become the long-term capital mobilization channel for the economy as it is really a secured market.