Vietnam's stock market capitalization was estimated at VND5,416 trillion ($230.4 billion) at the end of April, equivalent to 60.89% of the country’s 2022 GDP, according to the State Securities Commission (SSC).
Vietnam has three bourses: the Ho Chi Minh Stock Exchange (HoSE), the Hanoi Stock Exchange (HNX), and the unlisted public company market UPCoM. The stock market has become an important medium and long-term capital mobilization channel for the economy.
According to the market watchdog, enterprises mobilized VND731,349 billion ($31.14 billion) through the issuance of shares and corporate bonds in 2021, including nearly VND95,698 billion ($4.07 billion) in shares, VND29,766 billion in corporate bonds via public offerings, and VND605,934 billion in corporate bonds via private placements.
In 2022, the value of capital raised through share issuances and corporate bond public offerings was estimated at VND116,684 billion ($4.97 billion).
The market has 758 stocks and fund certificates listed on the two stock exchanges and 857 stocks registered on the UPCoM with a total value of VND1,992 trillion ($84.8 billion), equivalent to 20.9% of last year’s estimated GDP.
There are 449 listed bond codes with a value of over VND1,834 trillion ($78.1 billion), or 19.3% of the estimated 2022 GDP.
The increasing number of investors has contributed to boosting market liquidity. The number of investor accounts at the end of April 2023 was over 7 million, up over 1.5 times from the end of 2020 and exceeding the target of 5% of the population set for 2025. They include more than 7 million domestic investor accounts and 43,465 foreign ones, up 156% and 24% from the end of 2020, respectively.
In addition, securities trading organizations have continued to be restructured with enhanced management and supervision, and strict control of their operations. At the same time, state management over securities and the stock market has been increasingly improved, according to the commission.
Besides these positive results, Vietnam's stock market has still revealed some limitations, it noted.
Firstly, individual investors still make up the majority on the stock market, while institutional investors account for a small proportion, leading to unstable transactions. Many individual investors are not fully aware of legal conditions and show limited understanding, so they often buy and sell shares following hearsay.
Secondly, supervision and inspection activities still face many difficulties as legal violations in the market have become increasingly sophisticated and complex while supervision and inspection resources remain limited.
Thirdly, there is a lack of diversity in the stock market, with commodities mainly being listed or registered stocks, while there are only few derivative securities packages.
Fourthly, the market is now in a development stage, so it is still influenced by psychological factors. The impact of false rumors, concerns about cash flow, inflationary pressure, global political-economic uncertainties, and the downward trend of the global stock market, caused a sharp decrease in the domestic market from April 2022 until the first months of 2023.
Expectations from solutions
The SSC believes that the Vietnamese economy and its stock market will still face many difficulties and challenges in 2013.
In order to ensure the continuous, smooth, stable and transparent operation of the stock market; promote its sustainable, safe and transparent development; and protect the legitimate rights and interests of investors, the commission is reviewing provisions in the Securities Law and guiding documents in order to fix shortcomings.
It will supplement regulations to better manage investors and increase sanctions against violations, thus ensuring the healthy, transparent and sustainable development of the stock market.
Regarding market organization, the commission will speed up the inauguration of a new stock trading system developed by the Korea Exchange (KRX) in order to facilitate the launch of new products and services on the stock market and ensure its smooth, continuous, safe and effective operation.
The SSC is directing related parties to prepare a trading platform for privately placed corporate bonds, helping enhance transparency in the secondary market, while accelerating the restructuring of the stock market.
It will also strengthen supervision of securities companies to promptly prevent and detect violations in the market; continue closely monitoring developments in the domestic and international stock markets; coordinate with relevant agencies and organizations to promote the supervision of trading on the stock market, and give early warnings to investors regarding risks.
Examination and inspection activities will be strengthened and violations in the stock market will be strictly punished to enhance discipline for the transparent and sustainable development of the stock market.
The commission will provide complete, accurate and timely information to investors, limiting the influence of rumors and fake news on their sentiment.
It will also actively coordinate with international organizations to implement solutions to upgrade the Vietnamese stock market in order to attract more engagement of foreign investors.