Vietnam's securities 'more appealing' than other Southeast Asian markets

The Vietnamese stock market has an enticing price-to-earnings ratio of 13 in 2022 and likely 10 in 2023, much lower than numerous Southeast Asian counterparts, drawing attention from foreign investors.

Don Lam, CEO and co-founder of VinaCapital, shared the information at the 4th Vietnam Economic Forum themed "Building an independent and self-reliant economy associated with integration in the new normal stage", held in Ho Chi Minh City on Sunday.

Other experts noted the impact of external and internal issues on the Vietnamese market, including the unstable global economy induced by inflation, the Russia-Ukraine crisis, and the U.S. interest rate hike. Domestically, several recent events involving market manipulation have also had an influence on investor sentiment.

"The Vietnamese market is plunging deeply, but only in the short term. Investors must remain calm and confident. The market will stabilize in the long run," Lam said. VinaCapital is one of the leading fund management firms in Vietnam.

However, in order to strongly lure foreign involvement, Vietnam's stock market must diversify products, boost liquidity, ease restriction on foreign ownership, and raise market transparency, he emphasized.

"If these steps are taken, Vietnam's stock market might be upgraded to an emerging market in the near future, potentially drawing up to $10 billion in additional foreign investment."

Overall, Vietnam’s capital market has three fully operational components including securities, bonds, and derivatives markets, said Pham Hong Son, Vice Chairman of the State Securities Commission (SSC).

The capital market grew by an average 28.5% per year during 2016-2021, reaching 134.5% of GDP in 2021, 3.5 times its size in 2015. Of this, the stock market accounted for 93.8%, while bonds made up 39.7%, Son added.

Despite the rapid growth, the Vietnamese market has also encountered several emerging challenges like increasingly sophisticated price manipulation.

"The market has recognized and dealt with serious violations in the past. This is a very suitable action, a deterrent warning that serves to increase market transparency," said Nguyen Hoang Duong, deputy director of the Ministry of Finance's department of banking and financial institutions.

Devendra Joshi, chief strategist at Sovico Group, stated at the event that while Vietnam's bond market remains modest, it is evolving comparable to emerging economies.

Many foreign investors are concerned about market transparency in order to ensure long-term capital market development. Therefore, it is necessary to have respectable credit rating agencies to soon determine the Vietnamese bond value, Joshi added.

The SSC leader declared that it will continue to supervise the market with goals of ensuring market security and transparency, as well as defending investor rights and interests.

Bringing violations to light will help safeguard legitimate investors and keep the bond and stock markets healthy, Prime Minister Pham Minh Chinh told a conference on capital market development in Hanoi on April 22.

"Violators are the minority. These moves are necessary to make the markets cleaner, healthier, safe, and more sustainable."