Market shows many optimistic signs

SGI

Although the stock market in 2019 has fallen since 2018, in general it still maintains a long-term growth momentum. For the stock market to develop even further in depth, the new amended Securities Law passed by the National Assembly in November will be a strong premise.

Illustrative photo.

Illustrative photo.

Foreigners remain net buyers

According to the latest statistics from the Ho Chi Minh Stock Exchange (HOSE), market liquidity remained stable with an average trading volume of 177.84 million shares, equivalent to an average value of VND 4,808 bn per day. However, compared to the same period in 2018, there was a decline of 12.32% in volume and 28.16% in value. Foreign capital inflow into the market in the past eleven months also remained stable. The total trading value of foreign investors reached nearly VND 294,906 bn, accounting for about 16% of the total trading value of the entire market. Even though foreigners net sold in the last months of 2019, from the beginning of the year to now, they have also net bought nearly VND 7,513 bn.

From the beginning of the year to now, HOSE has issued new listing decisions for ten stocks, nine corporate bonds, and have put 12 stocks and 11 bonds on trade, with total listing of around 4.9 bn shares, including big companies such as Vietnam Airlines Corporation (HVN), Vietnam Oil and Gas Corporation (POW), and Viglacera Corporation (VGC). Market capitalization on HOSE on 30 November reached over VND 3,300 trn, an increase of 15.1% compared to the end of 2018, accounting for 95% of the total market capitalization of listed stock, reaching about 60% GDP in 2018.

There were 17 successful auctions on HOSE, including four times equitization and two offers under the SSC license and eleven selling of state capital. The total number of successfully auctioned shares in this period reached 86.4 million shares, equivalent to a total value of VND 1,885 bn sold.

In 2019, HOSE approved membership of three new securities companies, namely, CV Securities, EuroCapital Securities and AIS Securities. Thus, the member securities companies of HOSE increased to 74 companies with a total charter capital of more than VND 60,000 bn. Also in this year, the ability to raise capital of securities companies was quite favorable. There were twelve securities companies which increased charter capital with a total value of capital increase of VND 4,700 bn from the share offering and transfer of capital from equity. However, due to declining liquidity in the market, securities companies have more difficulty in brokerage activities.

Launch of many products

In this period, an important event which was received positively by the market, was that HOSE officially put the warrant certificate (CW) on the list and traded on 28 June after a long time of preparation. Until 30 November, there were 53 warrants which were issued listing decisions, with a volume of 128.2 million rights certificates on 17 underlying stocks. Therefore, up to reporting time, there were 378 stock codes, three closed fund certificates, two ETF certificates, 39 CW and 44 TPDN on HOSE with a total listed volume of 85,304 million shares.

This was a product to help diversify investment options in the market, increase liquidity, and support stock market to develop stably and sustainably. CW's liquidity in both monthly volume and average trading value remained stable. Liquidity of grassroots stocks improved, and the average value increased in the first six months of 2019 before deploying the products.

Market shows many optimistic signs ảnh 1
On 18 November, HOSE officially launched a set of investment indicators at the request of customers. This is a new type of index in the market built by HOSE at the request of investment funds to develop index-based products. This is an inevitable step which was taken by stock exchanges across the world to meet the diverse investment needs of the market.

Improved stock market

From the beginning of 2020, HOSE will focus on some key objectives. The first will be to develop the market in the direction of increasing the scale, promoting liquidity coupled with intensive development, and improving the quality of listed enterprises. To achieve this goal, HOSE will complete the construction of a project to list shares listed on HOSE; study and propose a legal framework for the implementation of the scheme of products of depository certificates without voting rights (NVDR); closely monitor the status of CW operations and coordinate with SSC units to complete the legal provisions, as well as research on the development of warrants on the index; and continue to promote corporate governance as well as sustainable development for the listed enterprises.

In coming times, HOSE will continue to focus resources on deploying information technology projects, ensuring that the project will be completed according to  approved schedule, including getting ready for infrastructure and human resources to receive and transfer the system; and coordinate with beneficiary units to follow the agreed project plan on schedule. The system is expected to go into operation, which will contribute to increase liquidity as a basis for the development of the stock market in the long term. In addition, in parallel to enhancing the system's safety and security, implementing the Government's policy on improving information security and projects on information security and monitoring services were also implemented.

An amended Securities Law was passed by the National Assembly and came into effect from 1 January 2016. Thus, the system of normative documents guiding the amended Securities Law will be issued simultaneously by authorities in 2020. In addition, the new trading system KRX will also be expected to start operating by next year. To ensure activities are carried out continuously and smoothly, the completion of regulations, processes, and professional instructions of HOSE require to be carried out on schedule.

Translated by Francis

Hai Ho

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