The Vietnamese stock market has experienced ups and downs through 2022. As the year is about to end, let’s look back at some of the most remarkable highlights on the market from the past 12 months.

VN-Index - one of the world’s top four index losers

Following the boom in 2020-2021, the market benchmark VN-Index has continued to fall in 2022. As of December 23, the index was 1,020.34 points, a decline of nearly 32 per cent over 2020-2021 and was one of the world’s four indices with the largest losses.

It had lost more than 33.6 per cent over the peak set on January 10 at 1,536.45 points.

The bearish trend was primarily caused by the prolonged geopolitical tension between Russia and Ukraine, which caused crude prices to skyrocket, disrupting global production and supply chains.

Rising inflation after more than a year of monetary easing has pushed central banks to hike rates and stop injecting money into the economy.

Domestically, the market continuously encountered shocks, such as the prosecution of senior leaders at FLC Group, Tan Hoang Minh Group, and Van Thinh Phat Group, which affected the sentiment of retail investors, which account for 90 per cent of the investor structure in the stock market.

Other negative factors include higher interest rates and tighter credit for high-risk lending segments, including real estate and securities.

Crackdown on the stock market

Early in 2021, the State Securities Commission of Vietnam (SSC) repeatedly sent a message to strengthen supervision, improve the efficiency of management and supervision of the stock market, and strictly handle violations, ensuring discipline to protect the interests of investors and the healthy operation of enterprises.

This message was realised in 2022 when the market saw a record number of administrative sanctions imposed on internal shareholders, listed companies, and securities firms advising on issuing corporate bonds.

Frozen corporate bond market

During 2018-2021, the corporate bond market soared. The total issuance volume of corporate bonds reached about VND643.5 trillion (US$27.3 billion) in 2011-2018, according to VBMA data, while the amount was up to VND658 trillion just in 2021, with nearly VND628 trillion being private offering bonds.

The size of real estate corporate bonds reached over VND232.3 trillion with an average term of 3.37 years.

The rapid growth of the market has brought many risks. State management agencies have carried out strong solutions to restructure the corporate bond market, most notably the prosecution of Tan Hoang Minh Group and Van Thinh Phat Group.

After the development, the market was almost frozen. Data as of December 16 from the VBMA showed that the value of private issuance of corporate bonds in 2022 is only VND244 trillion, which accounts for about 96 per cent of the total issued value but is down 60 per cent year-on-year.

Meanwhile, in the same period, VBMA data recorded that businesses bought back more than VND182.7 trillion, an increase of 38 per cent over last year.

Retail investors’ sentiment was severely affected, leading to a wave of capital withdrawals from bond investment funds.

On the other hand, Decree 65 amending Decree 153 was issued, which became effective on September 16, to further tighten the conditions for issuing corporate bonds.

Mixed picture of domestic and foreign investors

Foreign investors began net buying on November 3, with a surge in purchases beginning on November 10.

Since then, they have maintained their status as net buyers for four consecutive weeks with a value of more than VND19 trillion from November 3 to December 2.

As of December 23, they continued to net buy nearly VND9.8 trillion in December 2022.

Foreign investors net bought nearly VND21.5 trillion for the year, according to baodautu.vn.

In November alone, the total net buying value of foreign investors with contributions from foreign ETFs, most of which were Fubon ETFs, was about VND4.5 trillion, while the domestic ETF was about VND1.1 trillion.

On the contrary, domestic retail investors in November sold a net value of nearly VND19 trillion, the largest ever in history. As of December 23, they continued to net sell more than VND9.5 trillion in December.

Force sells from many companies’ leaders

The wave of forced selling by leaders of listed companies took place mainly in real estate and construction groups. As a result, the stocks in this group fell precipitously due to news such as the depositing of four land lots at the Th Thiem auction and bond maturity pressure.

On December 22, Nguyen Van Dat, chairman of the Board of Directors of Phat Dat Real Estate Development Company (HoSE: PDR), announced that he had sold more than 3.5 million PDR shares by order matching method on December 21.

From November to early December, Dat had to force sell a total volume of more than 30 million shares.

Similarly, on December 9, Do Quy Hai, chairman of Hai Phat Investment Company (HoSE: HPX), announced that he had to force to sell 295,500 HPX shares by a securities company.

Many other leaders of listed companies, such as Novaland (NVL), Development Investment Corporation (HoSE: DIG), Ba Ria - Vung Tau House Development (HoSE: HDC), and Hoa Binh Construction Group (HoSE: HBC), had to force sell their shares.

Shorten the settlement cycle to T+2

Starting August 29, the Vietnam Securities Depository Center (VSD) officially reduced the settlement time for securities transactions to T+2.

The shortening of the payment cycle from T+3 to T+2 is seen as the result of the drastic direction of the Ministry of Finance and the efforts of VSD, the stock exchanges, and other stock market members.

This is a breakthrough in the Vietnamese stock market payment cycle and is also one of the goals for market upgrading. The shortening of the settlement cycle is expected to contribute to increasing liquidity and the attractiveness of the stock market. — VNS