Vietnamese securities firms will see opportunities as collaboration between ASEAN exchanges brings more capital to Viet Nam's stock market and makes firms improve their competency to satisfy international standards, stock regulators said on October 7 at a meeting. — Photo cafef.vn

HA NOI (Biz Hub) — Vietnamese securities firms will see opportunities as collaboration between ASEAN exchanges brings more capital to Viet Nam's stock market and makes firms improve their competency to satisfy international standards, stock regulators said yesterday at a meeting.

Collaboration between stock exchanges in the Association of Southeast Asia Nations (ASEAN) would benefit all stakeholders, including investors, issuers, intermediaries and local governments, the Malaysian bourse Bursa Malaysia Director of Securities Market Ong Li Lee said.

ASEAN capital markets are small compared to the US and European markets, thus co-operation was needed to take advantage of the free flow of goods, services, investment and capital offered by the harmonisation between regional countries, according to Lee.

If regional markets were able to join together, the collaboration would facilitate economic growth, diversify sources of financing, investment channels and lower prices for financial services for economies of scale, she added.

Issuers and financial companies would be able to tap a larger pool of investors and reduce administrative costs, thus improving the quality of products and services at more competitive prices.

For local governments and regulatory offices, collaboration would allocate capital more efficiently as savings may flow to investment at a lower cost because barriers have been partly removed, according to the Bursa Malaysia official.

The collaboration would also help improve the competitiveness for ASEAN countries on international markets and enhance the development of capital markets in the region, she added.

"ASEAN market capital growth between 2010 and August 2016 outpaced Asia peers following the information of ASEAN Exchanges collaboration," Lee said when she presented the statistics of the World Federation of Exchanges.

In addition, individual ASEAN stock exchange recorded higher trading value growth than most other Asian peers following the information of ASEAN Exchanges Collaboration, launched in April 2011. The only bourse in Asia having higher trading value growth than ASEAN markets is the Shenzhen stock exchange.

Increasing growths in market capitalisation and trading value also help financial institutes improve their income and offer them opportunities to expand.

According to the Ha Noi Stock Exchange, total revenue and after-tax profit of 76 securities firms on the northern market last year fell 8.5 per cent and 14 per cent, respectively, from 2014's figures to more than VND9.6 trillion (US$427.46 million) and VND6.4 trillion as the overall market trading liquidity dropped on the slowdown of the global economy and share prices declined.

The picture got better in the first half of this year. The same 76 securities companies on the northern market earned more than VND5.8 trillion in revenue and VND1.2 trillion in after-tax profits, increases of 30 per cent and 4 per cent, respectively, from the same period of last year.

The improvement came after the benchmark VN Index and the HCM Stock Exchange jumped 9.2 per cent during this period and the HNX Index in the northern market advanced 6 per cent, leading to increases in both trading liquidity and share prices.

Things could improve for market members as up to the end of yesterday's trading session, the VN Index surged more than 18 per cent from the beginning of this year, and the HNX Index gained about 6.7 per cent.

Pham Hong Son, deputy chairman of the State Securities Commission, said in the first nine months, brokerage firms had made efforts to improve their products and services.

"They have succeeded in improving risk management and assuring the security of customer accounts, and following market regulations better," he said.

However, those companies still had to improve business conditions as regulatory agencies would try to make the derivatives market come into effect by the end of this year, and that would be an opportunity for securities firms to perform better, he said.

"Derivatives markets are complicated to operate, so it may take some time for brokerage firms and investors to get familiar with the new products," he said.

The SSC would continue to reduce the number of operating securities firms in the future to enhance the health of the stock market as only 15 of the current 76 companies met requirements of the market regulator and 20 others were labeled as weak-performing ones, he said. — VNS