Stock market has foundations to develop sustainably this year

Positive impacts from state capital divestment and initial public offerings (IPOs) by state own enterprises have strongly attracted capital especially foreign flows to the stock market, creating solid foundations for the market to develop strongly and sustainably this year.

Investors at a stock company (Photo: SGGP)

Investors at a stock company (Photo: SGGP)

That was said by representatives from State Securities Commission of Vietnam (SSC) and others at a conference to implement stock market development missions yesterday.
According to Ms. Vu Thi Chan Phuong, SSC deputy chairwoman, in early days of 2018, capitalization increased by 10 percent reaching VND3,800 trillion (US$167.33 billion ) equivalent to 77.2 percent Gross Domestic Product (GDP).
Liquidity averaged VND9.6 trillion ($422.68 billion) a session, up 90 percent over the average level in 2017 and 46 percent over the fourth quarter of the year.
In 2017, capitalization reached VND3,500 trillion, surging 80.5 percent compared to 2016 equivalent to VND70.2 percent of the year’s GDP. The market liquidity was up 66 percent from VND3 trillion a session in 2016 to VND5 trillion a session in 2017.
The VN-Index and HNX-Index raised 48 percent and 46 percent respectively, the highest rates for the last ten years.
The derivatives market coming into operation on August 10, 2017 posted a growth in contract volume, transaction value and account number. The portfolio value by foreign investors reached US$32.9 billion by the end of December, up 90 percent over 2016. This proves the attraction of the Vietnamese stock market and foreign investors’ interest in the market.
Investment operations by foreign investors strongly increased. By the end of the year, they posted net purchase values in all exchanges with the total of VND46.7 trillion including VND28 trillion stocks, fund certificates and VND18.7 trillion bonds.
They were also net buyers in all sessions in January this year with the net purchase value of VND7.2 trillion.
However, Ms. Phuong said that many stocks have seen price increase faster than profit growth for the last past and that has hiked the valuation of the stock market.
Although the price/earnings ratio (PE) of the Vietnamese stock market in the HCMC Stock Exchange was 23.24 times lower than Indonesia and 23.1 lower than the Philippines by the end of last year but it still went up 17 percent over 2016 or 19.26 times.
Mr. Nguyen Duy Hung, chairman cum director general of Saigon Securities Incorporation, said that the stock market has well developed thanks to the Government’s viewpoint of not mobilizing resources but giving policy orientations for other economic sectors to do so; creating healthiness, efficiency and well developed economy. The belief of investors in the stock market last year and early this year was very good, he said.
In addition, SSC’s crackdown on violations in the stock market, for instance it has revoked the work permit of an audit company’s director general and issued heavy penalty to an individual investor for seeking profit in the market. These moves have increased the belief of investors and investment amount in the market.
The importance in 2018 is to continue keeping the investors’ belief so that the stock market will remain to be a channel to mobilize capital and keep assets for investors. Foreign investors have expected the upgrading of the Vietnamese stock market.
Chairman of SSC Tran Van Dung said that the commission has established a group to continue pursuing the upgrading and report the progress monthly. The upgrading will increase the market’s scope and liquidity.
The key solution to expand the market scope determined by the commission and the Ministry of Finance is to intensify equitization and listing in the stock market of state own enterprises.
Mr. Tran Thanh Tan, chairman of Vietnam Fund Management Club, said that Vietnam now has a big chance to lure capital from domestic and foreign investors with growth opportunities of the Vietnamese economy in the next ten years.

By NGOC QUANG – Translated by Hai Mien

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