A loss in investor confidence and too many rumors are major factors behind the recent plunge in the Vietnamese stock market, says Finance Minister Ho Duc Phoc.
“We will share more information about listed companies via official channels and take measures to strengthen their operations” he told local media Wednesday.
Vietnam’s stock market has fluctuated strongly as investors become cautious, given global uncertainties and a less positive economic outlook. Their confidence has also been dented by the corporate bond crisis and the arrests of the leaders of Tan Hoang Minh and Van Thinh Phat groups for violations.
The VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE) has lost nearly 600 points (38%) from the beginning of this year, with many stocks losing 70% of their value.
Closing the Wednesday session, the benchmark dropped 6.112 points or 0.64% to 946, with 542 million shares changing hands for over VND7.8 trillion ($313.9 million).
According to the minister, a sharp decline in the bond and stock markets, high bank interest rates, and the State Bank of Vietnam's (SBV) warnings about risks from real estate loans have caused tightened capital supply for the real estate market, leading to a liquidity crisis.
Authorities are looking for ways to enable real estate businesses to access capital to address the sector’s current downturn. They are also trying to make it easier for developers to find capital sources over the next few years, he said.
“Developers are in financial trouble as they have expanded investment activities beyond their capacity, like implementing dozens of projects at once. With the SBV’s credit tightening to curb inflation, these companies have faced liquidity problems, reducing investor confidence,” he explained.
Phoc noted that authorities will also speed up the licensing of property projects, work with the SBV to reduce loan costs for businesses and support debt restructuring.
"Bond issuers must provide accurate information and pay bond debt on time to regain investor confidence,” he said.
Vietnam aims to increase the corporate bond debt size to 25% of GDP by 2023, from the current 11%. The total value of the current bond market is now VND1.2 quadrillion or $48.31 billion.
About concerns of a serious real estate recession that will affect the national economy, Phoc emphasized that the government has set up a working group to remove difficulties facing realty projects.
“The situation may change in the near future. This will restore market confidence,” he said.
Authorities are also trying to make the process of changing construction permits easier and faster, and give companies more flexibility in changing investment plans to take advantage of opportunities in the market, including shifting from developing an office building to an apartment building or affordable housing, the finance minister added.