The Vietnam Journalist Club has announced its annual list of the Top 10 significant events in Vietnam's stock market during 2015.
1. Foreign ownership ceiling removed
On June 26 the government issued Decree No. 60/2015/ND-CP allowing foreign inventors to fully invest in listed companies not under specific sector requirements as well as in government and enterprise bonds. The step is significant in attracting foreign investors to the stock market and helps it move from being a frontier market to an emerging market. A month later the Ministry of Finance provided details on how foreign investors could increase their holdings in listed companies. As at the end of 2015, however, only Saigon Securities Inc. has been permitted to increase its foreign ownership to 100 per cent. Other companies are still waiting for further guidance.
2. Blueprint and draft legal framework for derivatives market created
On May 5, 2015 the government issued Decree No. 42/2015/ND-CP introducing high-risk protection products to the market, with derivative products expected to be available by the end of 2016. In July the Ministry of Finance directed the State Securities Commission to continue to develop the legal framework for the derivative markets, the Hanoi Stock Exchange to prepare for such operations, and the Vietnam Securities Depository to provide payment services.
3. Market influenced by many external factors
Vietnam’s macro-economy has recovered strongly and recorded positive growth but the stock market was affected by a range of external factors that limited its growth. Two of the most important were the fall in the oil price, which resulted in oil shares tumbling, and the USD becoming stronger and the Chinese Yuan being devalued, which forced the State Bank of Vietnam to adjust the VND/USD rate, with the stock market impacted as a result. Additionally, from the third quarter of this year foreign investors were strong net sellers in the market, putting it under more pressure.
4. Fraud in public offerings now a criminal offense
A new amendment to the criminal law was approved by the National Assembly on November 27, with fraud in public offerings and listed stocks now a criminal offense. The amendment will help efforts to clean up the market.
5. Change in settlement mechanism
On December 18 the Vietnam Securities Depository issued a new policy changing the settlement date for stock and treasury bills to follow the T+2 mechanism. This marks a significant change in stock market transactions, as over the 15 years it’s been in operations it has followed T+3 settlement procedures. The change requires major efforts from operating agencies such as brokerage firms and banks providing settlement activities.
6. Stock market celebrates 15th birthday
Vietnam’s stock market turned 15 years old in July. Total capital mobilized via markets in that time stands at VND2,000 trillion ($88.96 billion), of which about $15 billion came from foreign investors. Total bonds issued reached 22 per cent of GDP and market capitalization 32 per cent of GDP. In the last ten years capital mobilized via stock markets met 23 per cent of capital demand. The figures indicate that the stock market is become an increasingly important capital channel.
7. Selling whole blocks of shares
Decision No. 41/2015/QD-TTg from the Prime Minister allowing the sale of whole blocks of shares boosted the divestment process of State-owned enterprises (SOEs). Selling in blocks provides investors with the opportunity to become strategic shareholders with the right to make important decision in restructuring the business.
8. Downfall of JVC
The Japan Vietnam Medical Instrument Company (JVC) lost 65.6 per cent of its value over the course of 18 days of trade. The share was previously considered a solid share in which to invest. Its downfall followed rumors that its Chairman and CEO had been arrested. By the end of the year JVC had lost 73 per cent of its value. The share’s travails are evidence of the drawbacks of information being leaked to the market.
9. New products on UPCoM market
Several support policies for the UPCoM market took effect during 2015. Decree No. 60, issued on June 6, 2015, cut the waiting time for stocks to list on the market after equitization from 90 days to 60 days. On November 13 the Ministry of Finance also issued documents directing the registration and trading of unlisted stocks on UPCoM, to take effect on January 1.
Consequently, 100 enterprises took their shares to UPCoM in 2015, 1.6 times higher than 2013 and 2014 combined. In order to attract more trading on UPCoM the ceiling and floor ratios were increased to +/- 15 per cent per session, effective from July 1, 2015.
10. National Assembly allows lower government bond terms
At the 10th session of the National Assembly XIII, the legislature allowed the issuance of government bonds with terms of less than five years, but 70 per cent must be ten-year or 15-year terms. This is a notable step by the National Assembly because in 2014 it only allowed terms of longer than five years. These longer terms, however, were unattractive among investors. The new three-year bonds, however, attracted a great many investors, with VND6 trillion ($266.88 million) being sold at a yield of 5.9 per cent per annum.