Securities market expects stronger growth

14:27 | 24/01/2017 Finance - Banking

(VEN) - As of November 15, 2016, the Vietnamese securities market’s capitalization reached US$75.61 billion, equivalent to 37.8 percent of the country’s gross domestic product (GDP). The rate is expected to hit 70 percent by 2020.

securities market expects stronger growth
The Vietnamese securities market’s capitalization reached US$75.61 billion, equivalent to nearly 40 percent of Vietnam’s GDP

According to Nguyen Duy Hung - Chairman and CEO of the Saigon Securities Incorporation (SSI) and Chairman of the Pan Pacific Corporation, the Vietnamese securities sector was first established 20 years ago, but no one thought that it could be developed as it is today.

On those first days, there were only two listed companies - the REE and SAM - and four securities firms. Now, on Hanoi and Hochiminh stock exchanges, there are nearly 700 listed companies, while 320 shares are on the Upcom.

As of November 15, 2016, the Vietnamese securities market’s capitalization reached US$75.61 billion, equivalent to 37.8 percent of the country’s GDP. The rate is almost 40 percent if bonds are included.

Nguyen Ba Duong - Chairman of the Coteccons, a listed company on the securities market, confirmed that businesses enjoyed bigger benefits as soon as they joined the market. Coteccons was a state-owned enterprise. It transformed into a joint stock company in 2004 with an initial chartered capital of VND15.2 billion and the highest revenue of VND250 billion. The company has so far earned revenue of VND20 trillion per year and is expected to grow 40-50 percent in the coming years.

According to Dragon Capital Executive Chairman Dominic Scriven, many leading fund management companies in the world would like to invest in Vietnam’s securities market because of the market’s potential and foreign investors’ confidence. An American company wants to invest US$300 million in Vietnam but is encountering some difficulties, so increasing the market size is essential, he noted.

Vietnam is promoting the privatization of state-owned businesses and state enterprises’ withdrawal of capital from non-core businesses, while forcing companies to have shares listed on the stock market through Decree 60. This will help diversify the range of listed shares. The completion of the derivative market has also helped increase the Vietnamese securities market’s size.

Improving quality and standards of the securities market

According to Hochiminh Stock Exchange (HOSE) Chairman Tran Van Dung, Stoxplus and HOSE’s surveys of 115 investment funds’ representatives showed that 75 of the 115 funds (managing US$2.4 trillion) have allocated US$10.8 billion to the Vietnamese securities market, and that 83 percent of the 75 funds emphasized that they will increase investment in Vietnam after the Vietnamese securities market is upgraded from a frontier market to an emerging market. Half of them said that they would increase investment in the country by more than US$10 million each.

SSI Asset Management (SSIAM) CEO Le Thi Le Hang said that foreign investors have highly appreciated the investment potential in Vietnam, but they still concern about the quality of listed companies. Therefore, listed companies need to have plans for sustainable development and transparent governance approach.

Thanh Thanh