"The average market growth was 23 per cent per year during the period, the highest among emerging markets in East Asia and the ASEAN + 3," noted Bang.— Photo cafef.vn

HA NOI (Biz Hub) — After five years of operating separately from Viet Nam's stock market, the country's bond market has developed rapidly and provided the State with VND654.5 trillion (US$30.8 billion) in value.

Vu Bang, president of the State Securities Commission confirmed this at yesterday's press conference which the Ministry of Finance and the Ha Noi Stock Exchange organised.

According to Bang, the value represents nearly 18 per cent of the country's gross domestic product.

"The average market growth was 23 per cent per year during the period, the highest among emerging markets in East Asia and the ASEAN + 3," noted Bang.

Liquidity improved, with the average trading value of each auction increasing 7.5 times through the years from VND365 billion ($17.2 million) in 2009 to more than VND2.7 trillion ($127.3 million) so far this year.

In addition to market value, there were encouraging changes in the structure of investors. Although most buyers were commercial banks, the market received increasing interest from insurers, fund management companies and foreign investors.

"With an upgraded legal framework and improved liquidity and transparency, Viet Nam's bond market has lured more foreign buyers," Bang said.

"Instead of being just a tool for savings, Government bonds have generated profits over the years," he added.

However, the bond market was still small compared to banking markets in the overall structure of the financial market, said Pham Thanh Ha, vice president of the Viet Nam Bond Market Association.

Bond types were poor while the number of outstanding bonds remained large, with 536 codes traded on the Ha Noi Stock Exchange. "Meanwhile, derivative products have not been developed to reduce risks for investors when interest rates change," Ha added.

To attract more foreign investors, he suggested that the Ministry of Finance reduce or remove taxes until the market was more developed.

At the conference, the exchange signed a memorandum of understanding with financial news site Bloomberg to jointly develop the third version of the exchange's bond trading system. In the future, the new version will allow investors to trade online and use derivatives. The exchange also plans to connect with other foreign trading systems. — VNS