Illustrative image (Source: VNA) 1. 20-year hallmarks of the securitiessector:
On November 28, 2016, the StateSecurities Commission hosted a ceremony celebrating the 20th anniversary of the securities sector’s traditional day and received theIndependence Order, second class. Over the past two decades, Vietnam hasdeveloped a well-functioning securities market with more than 1,000 publicenterprises listed on the Hanoi Stock Exchange (HNX) and the Ho Chi Minh StockExchange (HSX or HOSE). The market capitalisation of all listed companies hitover 70 billion USD, attracting 1.6 million domestic and foreign investors. Upwards2 quadrillion VND has been raised for national and corporate development and nearly4,000 firms have launched initial public offerings via the market.
2. Year of “black swan” and unexpected shocks:
Vietnam’s securities market 2016 sufferedunexpected external shocks that left powerful repercussions, including the shutdownof China’s stock market onApril 1, the UK’s exit fromthe European Union on June 24, and the US presidential election result onNovember 9, which led to sell-off by investors. Two of the worst hits were onJune 24 and November 9 when the benchmark VN-Index slumped 5.47 percent and 3percent, respectively. Thanks to solid market fundamentals, it later recovered.
3. From IPO to trading platform –“record” short path:
On November 1, 2016, the FinanceMinistry’s Circular 115/2016/TT-BTC officially took effect. Accordingly, within20 working days from the deadline for making payment for the shares sold atauction, investors could trade shares on the Unlisted Public Company (UPCoM) market.Therefore, the path from the post-IPO to the securities market has beenshortened remarkably compared to 90 days as stipulated under the PrimeMinister’s Decision 51/2014/QD-TTg.
4. The birth of new combined benchmarkindex starts the merger of two bourses:
On October 24, 2016, theVNX-Allshare index officially debuted as the first common index for all stockson the HNX and HSX. The move is expected to increase market capitalisation andupgrade the status of the Vietnamese stock market from frontier to emerging. However,the merger still awaits the government’s official approval.
5. Towards selling holdings in bigState-owned firms:
On December 12, the State CapitalInvestment Corporation (SCIC) sold 9 percent of the State stake it held in theVietnam Dairy Products JSC – Vinamilk (code: VNM) at an auction on the HOSE. Upto 78,378,300 shares, or 60 percent of the shares offered at the auction, weresold to two foreign investors F&N Dairy Investment Pte. Ltd. and F&NBev Manufacturing Pte. Ltd. At the price of 144,000 VND (6.2 USD) per share, or7.7 percent higher than the closing price, the State collected 11.286,5trillion VND (490.7 million USD) after selling 5.4 percent of Vinamilk shares. Thoughthe transaction volume fell short of expectation, the SCIC’s first divestmentfrom Vinamilk was seen as a remarkable deal in 2016, and the largest deal in Southeast Asia during the year as it closed to 500million USD. The deal also opened up a series of the SCIC’s divestment activitiesin 10 major firms, as required by the Government at Document 1787/TTg-DMDN. Italso paved the way for the divestment of State capital in big and influentialenterprises in the market in 2017.
6. Slim boundary in ROS shares:
The issuance of ROS shares by the FLCFaros Construction (Faros) company not only attracted attention from thedomestic media but also foreign financial watchers such as The Wall StreetJournal. From its humble beginning as a small company registering a capital ofnearly 1.5 billion VND (650,000 USD) in 2011, Faros hiked its capital to 4.3trillion VND (186.9 million USD), up 2,860 times from the initial one. Anothersurprise to the media and investors was the abnormal rocketing price of ROSshares from 12,600 VND (0.54 USD) on the first trading day on September 1 to126,000 VND (5.4 USD) on November 25, marking a 10-fold increase within onlythree months on the market, bringing ROS to the ranks of top 10 stocks bymarket capitalisation.
7. MTM and “cold water bucket” intotrading platform:
On September 16, the Ministry ofPublic Security’s investigation police decided to launch criminal proceedingsagainst Tran Huu Tiep and his accomplices for swindling to appropriate assets inHanoi and otherlocalities. On September 19, Tiep, who was Chairman of the Board of Directorsof the Central Ming and Mineral Import-Export (MTM) company, was detained.Earlier on June 20, the HNX decided to suspend the trading of 31 million MTM shareson the UPCoM to protect investors’ rights and interest. The MTM shares thenlost 80 percent of its starting price to 2,600 VND each (0.113 USD). Such riskhas called for attention to be paid to better UPCoM monitoring, given itssignificantly recent rapid growth.
8. Derivatives market basicallyready for 2017:
On March 16, the HNX and theVietnam Securities Depository (VSD) announced a model and plan to develop a paymentand trading system for the derivatives market. As of the late 2016,preparations were basically completed. The presence of the derivatives market nextyear is considered an important milestone in a roadmap to perfecting thestructure of Vietnam’ssecurities market, contributing to refining commodities structure in thefinancial market, diversifying investment portfolio, providing counter-risk toolsand meeting increasing demand for hi-quality financial products.
9. Government bonds – anotherbumper year:
The government bond marketcontinuously set impressive records with as much as 281 trillion VND (12.2billion USD) being raised from the issuance of primary bonds, higher than thetarget of 250 trillion VND (10.8 billion USD) which was reset twice due toincreased demand. Another success was the continual maturity extension for governmentbonds. As of the late 2016, the average maturity reached 8.27 years, raisingthe total’s average to 5.63 years. In the secondary bond market, the totaltransaction value hit a record of nearly 1.5 quadrillion VND (65.2 billion USD)and the average trading value amounted to 6.2 trillion VND (269.5 million USD) persession.
10. Ownership room extension forforeign investors, “answer” in 2017:
More than one year since the Governmentissued Decree 60/2015/ND-CP on ownership room extension, only a few localcompanies have completely raised the bar for foreign investors. How to untiethe knot in the market is a question for 2017 when the new Investment Law willbe enforced. The new-generation Securities Law is expected to be submitted tothe National Assembly in 2018.-VNA
VNA
