Securities market Important capital channel

Chairman of the Board at the Ho Chi Minh Stock Exchange (HOSE) Tran Dac Sinh said the overall goal was set for the securities market to raise medium and long-term capital for the economy. Over the past 15 years, HOSE has constantly innovated to increase scale and improve the market quality. There are on HOSE 300 listed companies with a total capitalized value of more than VND1,000 trillion (equal to about 25 percent of Vietnam’s gross domestic product or GDP), nearly 90 member securities companies and more than 1.6 million investor accounts. HOSE saw an average daily transaction value of almost VND2.1 trillion in 2014. Listed companies in general doubled their chartered capital after being listed on HOSE. Several other listed companies increased their chartered capital 15-fold.

Deputy Chairman of the State Securities Commission (SSC) Nguyen Thanh Long said that since 2005, the securities market has helped the banking system increase capital from VND20.6 trillion to VND270 trillion while supporting the currency market in the supply of capital for businesses. The securities market’s development contributed to the transformation of state enterprises into joint stock companies and the fulfillment of two of the three key objectives of public investment and state business restructuring.

Since the first state businesses was auctioned through HOSE in 2005, more than 350 state enterprises have sold shares through the stock exchange, earning more than VND70 trillion for the state budget, including major state corporations and economic groups such as Bao Viet Holdings, Phu My Nitrogenous Fertilizer, Vinamilk, Vietnam Airlines, Vinatext, and Vietcombank, among others. Most of businesses once listed on HOSE operated more efficiently, and achieved better administration and improved transparency.

Economists said that while the securities market is growing and helping the raising of a large amount of capital for the Vietnamese economy, the economy remains significantly reliant on the banks’ capital, as capital raised directly through the securities market just accounted for less than 30 percent of the capital from the banks. This skewed picture needs to be balanced to reach the target of creating balanced and healthier financial markets (including capital and monetary markets) in Vietnam.

Tran Dac Sinh said investment, trading and risk control tools on the market remain humble, and that although market size has significantly increased, it is not large enough in relation to markets in the region and regulations on foreign ownership rights are still hindering investors from participation in the market.

The securities market should be acknowledged as a major channel to raise medium and long-term capital for economic development, which connects demand for attracting long-term capital with demand for long-term investment and offers various investment opportunities, persifies ownerships, and is a place where international integration and the government’s development policies are implemented, Sinh said./.

By Ngoc Thao