Strong efforts keep stock market from collapse in 2019: official hinh anh 1Vice Chairman of the State Securities Commission of Vietnam Pham Hong Son (Photo: VietnamPlus)

Hanoi (VNA) – The year 2019 was full of difficulties, and thanks to high efforts of relevant parties, the stock market did not witness a big collapse, said Vice Chairman of the State Securities Commission of Vietnam (SSC) Pham Hong Son.

The SSC reported that in 2019, the world’s economic situation changed complicatedly as a result of the US-China trade war and less positive economic growth of countries. However, thanks to the domestic macro-economic stability and the steering by the Government and the Ministry of Finance, Vietnam’s stock market sustained growth in many aspects and was an attractive destination for foreign investment flow.

Growth sustained in stock market

At a recent meeting of the SSC, Chief of the commission’s office Nguyen Tien Dung said as of December 6, the benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) stood at 963.56 points and the HNX-Index on the Hanoi Stock Exchange (HNX) was at 102.5 points, respectively rising 8 percent and declining 1.7 percent from the end of 2018.

However, market capitalisation still increased 10.7 percent to reach 4.38 quadrillion VND (188.5 billion USD), equivalent to 79.2 percent of the gross domestic product (GDP) in 2018. Trading value was estimated at only 4.639 trillion VND each session, down 29 percent from last year’s average.

SSC Vice Chairman Son said 2019 was a complicated year. The market’s sustained growth and the VN-Index’s continued uptrend were attributable to members’ high efforts. As a result, a big collapse did not happen and the stock market’s overall situation was not affected.

He added that after a year full of difficulties, securities companies’ revenue fell by over 20 percent. Besides, the decrease in the average trading volume each session discouraged the listing of new stocks. The number of stocks licensed to be issued reduced by half compared to 2018.

Quality of stock supply to be improved

The SSC’s report noted that although the total capital mobilised on the securities market this year grew 37.3 percent from 2018 to about 302.6 trillion VND, there were only 41 auctions to sell the State’s stakes in State-owned enterprises (SOEs). A total of 4.996 trillion VND worth of the State’s shares was sold, gaining 4.430 trillion VND.

There were also several additional auctions, earning 360 billion VND for businesses and the State, the report said.

Son attributed the modest number of such auctions to the fact that fewer SOEs have carried out equitisation and divestment of State capital, maybe because they believed the not-so-good market situation would make it hard for auctions of shares to be successful.

Dung said in 2020, the SSC will implement many solutions to increase the volume and improve the quality of stock supply. In particular, it will press ahead with the plan on the equitisation and divestment of State capital at SOEs for the 2017 – 2020 period, while stepping up examination to deal with the firms that do not go public after equitisation as regulated.

Additionally, the commission will consider the formation of a platform for trading shares of start-ups, along with the digitalisation of financial assets in the stock market. It will also apply new financial technologies, standardise the opening of e-contracts, consider the use of electronic Know Your Customer (eKYC) in customer identification, and build and issue a plan on piloting the crowdfunding model, the chief of the SSC’s office noted.

Vietnam aims to make the size of its stock market equal to 100 percent and 120 percent of the GDP in 2020 and 2025, respectively. It also looks to develop its bond market to be equivalent to 47 percent and 55 percent of the GDP in those respective years.

Meanwhile, the number of listed companies next year is hoped to increase by at least 20 percent from 2017. The number of investors in the market should account for 3 percent of the population in 2020 and 5 percent in 2025./.