Illustrative image (Source: VNA) 1. 20-yearhallmarks of the securities sector:
On November 28,2016, the State Securities Commission hosted a ceremony celebrating the 20thanniversary 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.Upwards 2 quadrillion VND has been raised for national and corporatedevelopment and nearly 4,000 firms have launched initial public offerings viathe market.
2. Year of“black swan” and unexpected shocks:
Vietnam’ssecurities market 2016 suffered unexpected external shocks that left powerfulrepercussions, including the shutdown of China’s stock market on April 1, theUK’s exit from the European Union on June 24, and the US presidential electionresult on November 9, which led to sell-off by investors. Two of the worst hitswere on June 24 and November 9 when the benchmark VN-Index slumped 5.47 percentand 3 percent, respectively. Thanks to solid market fundamentals, it laterrecovered.
3. From IPO totrading platform – “record” short path:
On November 1,2016, the Finance Ministry’s Circular 115/2016/TT-BTC officially took effect.Accordingly, within 20 working days from the deadline for making payment forthe shares sold at auction, investors could trade shares on the Unlisted PublicCompany (UPCoM) market. Therefore, the path from the post-IPO to the securitiesmarket has been shortened remarkably compared to 90 days as stipulated underthe Prime Minister’s Decision 51/2014/QD-TTg.
4. The birth ofnew combined benchmark index starts the merger of two bourses:
On October 24,2016, the VNX-Allshare index officially debuted as the first common index forall stocks on the HNX and HSX. The move is expected to increase marketcapitalisation and upgrade the status of the Vietnamese stock market fromfrontier to emerging. However, the merger still awaits the government’sofficial approval.
5. Towardsselling holdings in big State-owned firms:
On December 12,the State Capital Investment Corporation (SCIC) sold 9 percent of the Statestake it held in the Vietnam Dairy Products JSC – Vinamilk (code: VNM) at anauction on the HOSE. Up to 78,378,300 shares, or 60 percent of the sharesoffered at the auction, were sold to two foreign investors F&N DairyInvestment Pte. Ltd. and F&N Bev Manufacturing Pte. Ltd. At the price of144,000 VND (6.2 USD) per share, or 7.7 percent higher than the closing price,the State collected 11.286,5 trillion VND (490.7 million USD) after selling 5.4percent of Vinamilk shares. Though the transaction volume fell short of expectation,the SCIC’s first divestment from Vinamilk was seen as a remarkable deal in2016, and the largest deal in Southeast Asia during the year as it closed to500 million USD. The deal also opened up a series of the SCIC’s divestmentactivities in 10 major firms, as required by the Government at Document1787/TTg-DMDN. It also paved the way for the divestment of State capital in bigand influential enterprises in the market in 2017.
6. Slimboundary in ROS shares:
The issuance ofROS shares by the FLC Faros Construction (Faros) company not only attractedattention from the domestic media but also foreign financial watchers such asThe Wall Street Journal. From its humble beginning as a small companyregistering a capital of nearly 1.5 billion VND (650,000 USD) in 2011, Faroshiked its capital to 4.3 trillion VND (186.9 million USD), up 2,860 times fromthe initial one. Another surprise to the media and investors was the abnormalrocketing price of ROS shares from 12,600 VND (0.54 USD) on the first tradingday on September 1 to 126,000 VND (5.4 USD) on November 25, marking a 10-foldincrease within only three months on the market, bringing ROS to the ranks oftop 10 stocks by market capitalisation.
7. MTM and“cold water bucket” into trading platform:
On September16, the Ministry of Public Security’s investigation police decided to launchcriminal proceedings against Tran Huu Tiep and his accomplices for swindling toappropriate assets in Hanoi and other localities. On September 19, Tiep, who wasChairman of the Board of Directors of the Central Ming and MineralImport-Export (MTM) company, was detained. Earlier on June 20, the HNX decidedto suspend the trading of 31 million MTM shares on the UPCoM to protectinvestors’ rights and interest. The MTM shares then lost 80 percent of itsstarting price to 2,600 VND each (0.113 USD). Such risk has called forattention to be paid to better UPCoM monitoring, given its significantly recentrapid growth.
8. Derivatives market basically ready for 2017:
On March 16,the HNX and the Vietnam Securities Depository (VSD) announced a model and planto develop a payment and trading system for the derivatives market. As of thelate 2016, preparations were basically completed. The presence of thederivatives market next year is considered an important milestone in a roadmapto perfecting the structure of Vietnam’s securities market, contributing torefining commodities structure in the financial market, diversifying investmentportfolio, providing counter-risk tools and meeting increasing demand forhi-quality financial products.
9. Governmentbonds – another bumper year:
The governmentbond market continuously set impressive records with as much as 281 trillionVND (12.2 billion USD) being raised from the issuance of primary bonds, higherthan the target of 250 trillion VND (10.8 billion USD) which was reset twicedue to increased demand. Another success was the continual maturity extensionfor government bonds. As of the late 2016, the average maturity reached 8.27years, raising the total’s average to 5.63 years. In the secondary bond market,the total transaction value hit a record of nearly 1.5 quadrillion VND (65.2billion USD) and the average trading value amounted to 6.2 trillion VND (269.5million USD) per session.
10. Ownershiproom extension for foreign investors, “answer” in 2017:
More than oneyear since the Government issued Decree 60/2015/ND-CP on ownership roomextension, only a few local companies have completely raised the bar for foreigninvestors. How to untie the knot in the market is a question for 2017 when thenew Investment Law will be enforced. The new-generation Securities Law isexpected to be submitted to the National Assembly in 2018.-VNA
VNA
