Vietnam’s bond market contracts amid monetary tightening
After strong growth in the previous quarter, Vietnam’s currency bond market contracted 0.2% due to a decline in the Government bond market and slower growth in corporate bonds.
An advertisement for corporate bonds. (Photo: baodautu.vn)
Hanoi (VNA) - After strong growth in the previousquarter, Vietnam’s currency bond market contracted 0.2% due to a decline in theGovernment bond market and slower growth in corporate bonds.
On an annual basis, the market increased 21.1% to 97.4 billion USD.
The information was released in a recent report by the Asian DevelopmentBank (ADB).
The country's Government bonds contracted 2% as the outstanding stock ofcentral bank bills fell 70.3% from the previous quarter. Outstanding governmentbonds reached 67.3 billion USD. Expansion of corporate bonds moderated to 4.1%from the previous quarter, putting the segment at 30.1 billion USD.
The report said that aggressive monetary tightening in advanced economies has pushedup bond yields and worsened the downturn of financial conditions in emergingEast Asia.
Regional currencies fell against the US dollar, equities dropped,and risk premiums widened between August 31 and November 4, according to thelatest update of Asia Bond Monitor, released on Sunday today. Portfoliooutflows were also seen in most regional bond markets. Global inflation, slowergrowth in China, and economic fallout from the Russian 'military operation'in Ukraine continued to threaten the region's short-term prospects.
"Financial conditions in emerging East Asia weakened at a faster pace inSeptember and October than in the first eight months of 2022, due to theaggressive tightening by the US Federal Reserve," said ADB Chief EconomistAlbert Park. "However, the region remains largely resilient so far,despite various headwinds."
Local currency bond issuance in emerging East Asia contracted 1.1% from theprevious quarter to 2.2 trillion USD in the third quarter amid subduedinvestment sentiment. Local currency bonds outstanding grew 2.3% to 22 trillionUSD. Emerging East Asia comprises member economies of the Association ofSoutheast Asian Nations (ASEAN); China; Hong Kong (China); and the Republic ofKorea.
Government bond issuance dropped 4.5% from the previous quarter, whilecorporate bond issuance grew 5.7%, largely supported by Chinese companiestaking advantage of domestic monetary easing measures. Rising interest ratesdrove a 2.0% decline in corporate bond issuance in ASEAN markets.
The sustainable bond market in the ASEAN region plus China; Hong Kong (China);Japan and the RoK grew 1.7% to 521.6 billion USD at the end of September. Whilethe growth was slower than in the previous quarter, the segment witnessedimproved market profile and bond types diversification./.
The State Treasury recently announced a plan to auction Government bonds worth of 120 trillion VND (5.21 billion USD) via the Hanoi Stock Exchange in the third quarter.
The State Treasury raised over 23.08 trillion VND (1.017 billion USD) worth of Government bonds (G-bond) via 14 auctions held on the primary market on the Hanoi Stock Exchange (HNX) in January.
The Hanoi Stock Exchange (HNX) held 30 auctions of Government bonds (G-bonds) in October, with 55.66% of the total G-bonds on offer, worth 31.45 trillion VND (1.26 billion USD) sold.
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An advertisement for corporate bonds. (Photo: baodautu.vn) 
