Positive development of Vietnam’s stock market will provide firms with medium- and long-term capital mobilization opportunities

Market booms despite pandemic

Despite the resurgence of the Covid-19 pandemic, Vietnam’s stock market maintained stable operations with increasingly improved points and liquidity in 2021. The stock market size grew strongly, reaching 122.2 percent of Vietnam’s gross domestic product (GDP) on November 12, 2021 and appears set to reach the market capitalization target of 120 percent of GDP by 2025.

The stock market engaged the most investor interest compared to other channels. Given that deposit interest rates at commercial banks remained low and other investment channels faced many difficulties posed by the pandemic, domestic cash flow into the stock market increased strongly in 2021. The VN-Index reached 1,500 points, far exceeding the historic 1,200-point mark recorded in 2007 and 2018.

According to the State Securities Commission of Vietnam, the number of new trading accounts reached more than 1.31 million in the first 11 months of 2021 (domestic investors opened 1.3 million new accounts, a 3.3-fold increase compared to 2020), bringing the total to 4.08 million accounts.

Vietnam’s stock market also experienced a record high net selling by foreign investors in 2021 valued at over VND60 trillion.

The corporate bond market continued developing although not as fast as in 2020. According to the Ministry of Finance, in the first 11 months of 2021, total issuance value of corporate bonds reached more than VND495 trillion. Commercial banks led the corporate bond market, followed by a group of real estate companies. However, the market still poses risks, requiring the government, ministries and agencies to strengthen management, step up inspection and handle violations.

VN-Index set to hit new record

Tran Hai Ha, general director of the MB Securities Company, said he expects some Vietnamese stock market sessions to exceed US$3 billion in 2022 and the VN-Index to hit a new historical high.

Phan Duc Hieu, standing member of the National Assembly Economic Committee, said the positive development of the Vietnamese stock market will provide businesses with medium- and long-term capital mobilization opportunities in order to restore their trade and production activities.

Attending the December 2021 launching ceremony of the Vietnam Stock Exchange (VNX), merging the Hanoi and Ho Chi Minh stock exchanges, Deputy Prime Minister (DPM) Le Minh Khai said the exchange reflects Vietnam’s consistent policy of stock market development in order to mobilize medium- and long-term capital for economic development.

DPM Khai requested the Ministry of Finance, the State Securities Commission of Vietnam and the VNX in coordination with ministries, departments, local agencies, listed firms and investors to evaluate the implementation of the Stock Market Development Strategy in the 2011-2020 period and propose solutions to develop the Vietnamese stock market in the next stage in a transparent, efficient, professional and prestigious manner.

DPM Khai also wants Vietnam to gradually narrow the development gap between its stock market and the world stock market.

Minister of Finance Ho Duc Phoc emphasized the necessity of large-scale and professional securities trading organizations.

Lan Ngoc