1. 20-year hallmarks of the securities sector:
On November 28, 2016, the State Securities Commission hosted a ceremony celebrating the 20th anniversary of the securities sector’s traditional day and received the Independence Order, second class. Over the past two decades, Vietnam has developed a well-functioning securities market with more than 1,000 public enterprises listed on the Hanoi Stock Exchange (HNX) and the Ho Chi Minh Stock Exchange (HSX or HOSE). The market capitalization of all listed companies hit over USD 70 billion, attracting 1.6 million domestic and foreign investors. Upwards VND 2 quadrillion has been raised for national and corporate development and nearly 4,000 firms have launched initial public offerings via the market.
Photo for illustration: pif.vn
2. Year of “black swan” and unexpected shocks:
Vietnam’s securities market 2016 suffered unexpected external shocks that left powerful repercussions, including the shutdown of China’s stock market on April 1, the UK’s exit from the European Union on June 24, and the US presidential election result on November 9, which led to sell-off by investors. Two of the worst hits were on June 24 and November 9 when the benchmark VN-Index slumped 5.47 percent and 3 percent, respectively. Thanks to solid market fundamentals, it later recovered.
3. From IPO to trading 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 for the shares sold at auction, investors could trade shares on the Unlisted Public Company (UPCoM) market. Therefore, the path from the post-IPO to the securities market has been shortened remarkably compared to 90 days as stipulated under the Prime Minister’s Decision 51/2014/QD-TTg.
4. The birth of new combined benchmark index starts the merger of two bourses:
On October 24, 2016, the VNX-Allshare index officially debuted as the first common index for all stocks on the HNX and HSX. The move is expected to increase market capitalization and upgrade 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 big State-owned firms:
On December 12, the State Capital Investment Corporation (SCIC) sold 9 percent of the State stake it held in the Vietnam Dairy Products JSC – Vinamilk (code: VNM) at an auction on the HOSE. Up to 78,378,300 shares, or 60 percent of the shares offered at the auction, were sold to two foreign investors F&N Dairy Investment Pte. Ltd. and F&N Bev Manufacturing Pte. Ltd. At the price of VND 144,000 (USD 6.2 USD) per share, or 7.7 percent higher than the closing price, the State collected VND 11.286,5 trillion (USD 490.7 million) after selling 5.4 percent of Vinamilk shares. Though the transaction volume fell short of expectation, the SCIC’s first divestment from Vinamilk was seen as a remarkable deal in 2016, and the largest deal in Southeast Asia during the year as it closed to USD 500 million. The deal also opened up a series of the SCIC’s divestment activities in 10 major firms, as required by the Government at Document 1787/TTg-DMDN. It also paved the way for the divestment of State capital in big and influential enterprises in the market in 2017.
6. Slim boundary in ROS shares:
The issuance of ROS shares by the FLC Faros Construction (Faros) company not only attracted attention from the domestic media but also foreign financial watchers such as The Wall Street Journal. From its humble beginning as a small company registering a capital of nearly VND 1.5 billion (USD 650,000) in 2011, Faros hiked its capital to VND 4.3 trillion (USD 186.9 million), up 2,860 times from the initial one. Another surprise to the media and investors was the abnormal rocketing price of ROS shares from VND 12,600 (USD 0.54) on the first trading day on September 1 to VND 126,000 (USD 5.4) on November 25, marking a 10-fold increase within only three months on the market, bringing ROS to the ranks of top 10 stocks by market capitalization.
7. MTM and “cold water bucket” into trading platform:
On September 16, the Ministry of Public Security’s investigation police decided to launch criminal proceedings against Tran Huu Tiep and his accomplices for swindling to appropriate assets in Hanoi and other localities. On September 19, Tiep, who was Chairman of the Board of Directors of 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 shares on the UPCoM to protect investors’ rights and interest. The MTM shares then lost 80 percent of its starting price to VND 2,600 each (USD 0.113). Such risk has called for attention to be paid to better UPCoM monitoring, given its significantly recent rapid growth.
8. Derivatives market basically ready for 2017:
On March 16, the HNX and the Vietnam Securities Depository (VSD) announced a model and plan to develop a payment and trading system for the derivatives market. As of the late 2016, preparations were basically completed. The presence of the derivatives market next year is considered an important milestone in a road-map to perfecting the structure of Vietnam’s securities market, contributing to refining commodities structure in the financial market, diversifying investment portfolio, providing counter-risk tools and meeting increasing demand for hi-quality financial products.
9. Government bonds – another bumper year:
The government bond market continuously set impressive records with as much as VND 281 trillion (USD 12.2 billion) being raised from the issuance of primary bonds, higher than the target of VND 250 trillion (USD 10.8 billion) which was reset twice due to increased demand. Another success was the continual maturity extension for government bonds. As of the late 2016, the average maturity reached 8.27 years, raising the total’s average to 5.63 years. In the secondary bond market, the total transaction value hit a record of nearly VND 1.5 quadrillion (USD 65.2 billion) and the average trading value amounted to VND 6.2 trillion (USD 269.5 million) per session.
10. Ownership room extension for foreign investors, “answer” in 2017:
More than one year since the Government issued Decree 60/2015/ND-CP on ownership room extension, only a few local companies have completely raised the bar for foreign investors. How to untie the knot in the market is a question for 2017 when the new Investment Law will be enforced. The new-generation Securities Law is expected to be submitted to the National Assembly in 2018.
Source: VNA