Securities market forecast for 2020 bright

09:12 | 11/02/2020 Finance - Banking

(VEN) - The Ho Chi Minh Stock Exchange (HOSE) and Vietnam’s securities market will celebrate their 20th anniversary in 2020, entering a new stage of development expected to affirm its importance as a magnet for domestic and foreign investment capital and reverse its liquidity decline.

securities market forecast for 2020 bright
Making technology platforms consistent is important to improve the market’s liquidity and transaction efficiency

A busy year

Despite a decline in 2019 compared to 2018, the securities market in general maintained its long-term growth. The VN-Index rose to 970.75 points in December 2019, up 8.7 percent from late 2018.

The market remained stable, reaching an average number of traded securities of 177.84 million worth almost VND4.81 trillion per day. Foreign capital flow to the market was stable in 2019, with securities traded by foreign investors totaling almost VND294.91 trillion in value, accounting for about 16 percent of the market’s total.

HOSE reached a capitalization value of more than VND3,300,000 billion as of December 2019, an increase of 15.1 percent over the end of 2018 and accounting for 95 percent of the listed securities market’s total value and nearly 60 percent of Vietnam’s 2018 gross domestic product (GDP).

In 2019, HOSE issued a new listing decision for 10 shares and nine corporate bonds while launching 12 shares and 11 corporate bonds onto the exchange, including 4,911 million newly listed securities of such leading corporations as Vietnam Airlines, PetroVietnam Power Corporation (PV Power), and Viglacera, among others.

HOSE Deputy General Director Tran Anh Dao said that apart from traditional securities like shares, bonds and fund certificates, covered warrants (CW) were launched onto the market on June 28, 2019 for FPT, HPG, MBB, MWG, PNJ and VNM shares to improve the market’s goods structure, diversify investment options, increase market’s liquidity, and facilitate its sustainable development.

There are 378 shares, three closed-end fund (CEF) certificates, two Exchange Traded Fund (ETF) certificates, 39 CW and 44 corporate bonds with a total of 85,304 million listed securities on the HOSE.

Improved liquidity expected

HOSE set a target of developing the securities market by enlarging its scale, improving liquidity, strengthening intensive development and improving the quality of listed companies. In 2020, HOSE will accomplish the construction of a securities classification project, and research and propose a legal framework for implementation of a non-voting depository receipt (NVDR) project. In addition, HOSE will closely monitor CWs, work with State Securities Commission’s members to improve regulations, and research development of warrants of different kinds, and ETF certificates. It will continue facilitating listed companies’ corporate governance and sustainable development.

According to Nguyen Vu Quang Trung, board member and deputy CEO at HOSE, in 2019, the securities market’s liquidity decreased about 28 percent, taking Vietnam down to fifth place among the 10 ASEAN (Association of Southeast Asian Nations) countries, two levels lower than its 2018 ranking. However, the ranking is expected to improve in 2020 when new technology is applied to improve transaction efficiency and develop different new products and services according to international standards, Trung said. Testing of these tech platforms will last until June 2020, and HOSE will prepare resources to accomplish the project on time, he added.

HOSE also plans information security and supervision service projects. The revised Securities Law passed by the National Assembly on November 26, 2019 will take effect on January 1, 2021, and guidelines for implementing it will be issued in 2020.

The Vietnamese securities market’s ranking is expected to improve according to FTSE Russel’s criteria because compared to the previous interim review on March 2019, Vietnam has met seven of nine criteria required for its upgrade to secondary emerging market status. If Morgan Stanley Capital International (MSCI) joins FTSE Russel in upgrading the market’ status, it will be a great opportunity for Vietnam to attract additional foreign capital.

Ngoc Thao