SK Group and Vingroup leaders at the signing of deal in May 2019 to allow the former to purchase 6.15 per cent in the latter for US$1 billion. — Photo courtesy of Vingroup
The following have been selected as the top 10 events on the Vietnamese stock market in 2019.
1. New Law on Securities approved
The 14th National Assembly on November 26 approved the amended Law on Securities during its eighth meeting. The new law will take effect from 2021.
The new law aims to improve the quality of companies trading shares on the stock market and better protect investors.
In addition, the law paves the path for the establishment of the Viet Nam Stock Exchange and the Viet Nam Securities Depository and Settlement Corporation, in which the State holds more than 50 per cent of charter capital or total voting shares.
2. Overhaul plan for stock market passed
The Prime Minister on February 28 issued Decision 242 on restructuring the securities and insurance sectors until 2025.
The Government wants the value of the stock market to reach 100 per cent of Viet Nam’s total gross domestic product (GDP) in 2020 and 120 per cent in 2025. Meanwhile, the value of the bond market is expected to reach 47 per cent of total GDP in 2020 and 55 per cent in 2025.
3. Booming bond market
The corporate bond market flourished in 2019 with a total of VND237 trillion worth of bonds issued in January-November period, up 6 per cent on-year, with 30 per cent of the total coming from real estate companies. The value of the corporate bond market is now equal to 10.26 per cent of the country’s total GDP. Property developers have the highest bond yield rates of 15 per cent per annum, which has worried investors about potential risks.
4. Rise of domestic exchange-traded funds
The stock market has seen strong development in local exchange-traded funds E1VFMVN30, which raised nearly VND2.2 trillion from investors in 2019. Foreign investors bought a net value of VND2.4 trillion in E1VFMVN30 fund certificates, making it the second largest ETF in terms of value behind the US fund VanEck Vectors Vietnam.
5. Influx of foreign capital
Foreign investors rocked the market by buying into local large-cap firms. South Korean firms took the spotlight as SK Group purchased 6.15 per cent in Vingroup capital for $1 billion, and KEB Hana Bank bought a 15 per cent stake in the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) for $882 million. Other big deals include the $173 million buy-in of Japanese insurer Sumitomo Life for Bao Viet Group.
6. FTM fraud
Shares of the HoSE-listed firm Duc Quan Investment and Development JSC (FTM) lost nearly 91 per cent in four and a half months since August 13 to end Thursday at VND2,190 per share. The sharp decline raised concerns among investors about its directors who had taken advantage to manipulate the share price.
A dozen securities firms had accepted FTM shares as mortgages from investors for margin lending, and they had to force-sell the stock to cut losses.
7. Fine for real estate firm for not registering
On November 19, the State Securities Commission issued a VND400 million fine to real estate company FLCHomes for having not registered its public share issuance with the market regulator, and the company was asked to revoke all eligible shares and refund all investors.
FLCHomes had an instant reply, claiming it had completed all requests from the SSC and the company declared no investors had asked for the refund.
8. Covered warrant market debuts after seven-year preparation
On June 28, the Ho Chi Minh Stock Exchange launched a new product called covered warrants. This was the second derivative product on the Vietnamese stock market after the VN30 futures.
By December, average trading volume of covered warrants reached 2.81 million contracts each day, worth VND7.44 billion.
9. Lower-than-expected liquidity in 2019
Stock market liquidity had been widely expected to increase sharply in 2019 thanks to the influx of foreign capital. However, trading liquidity fell 29 per cent year-on-year to VND4.64 trillion in each session though the benchmark VN-Index had gained 6.8 per cent year-to-date by December 19.
10. Floor brokerage fee removed
Circular 128 dated December 27, 2018 sets the maximum rate of brokerage fee at 0.5 per cent of the value of a transaction but mentions nothing about the lowest rate. After the circular took effect on February 15, 2019, many securities firms zeroed their brokerage fees to attract investors. There are now 70 securities firms and the top 10 hold 65-70 per cent of the brokerage market share. — VNS