The medium and long-term capital mobilisation of businesses is mainly from the banking system. Therefore, it is necessary to promote the stock market to become the main capital channel for the economy.
In 2018, Vietnam’s stock market was an effective capital mobilisation channel for the economy, which was considered to be the most successful market in Southeast Asia in terms of capital mobilisation. Accordingly, the total value of capital mobilisation through the stock market reached more than 278 trillion dong, an increase of 14 percent compared to 2017, of which the government mobilised 192 trillion dong via government bonds and businesses mobilised more than 86 trillion dong.
Indirect capital of foreign investors continued to flow into Vietnam stock market while foreign investors withdrew in regional markets. The net buying value of foreign investors in the stock market was the highest with many net-buying sessions of more than $100 million, even with a session of net buying value reaching a record, over $1.25 billion.
For the whole year of 2018, foreign investors net bought about 43.9 trillion dong on the fund certificate market, focusing on large put-through transactions. Net foreign capital inflows on the stock market remained high ($2.75 billion in 2018 compared to $2.92 billion in 2017), reflecting the strong investment demand of foreign investors in Vietnam..
However, according to Ms Nguyen Thi Hong, deputy Governor of the State Bank of Vietnam (SBV), the total credit granted through the banking channel reached 7.5 quadrillion dong, equivalent to 130 percent of GDP while the current stock market size was only three quadrillion dong. “This is the stock market capitalisation, and the real asset is much lower. The majority of large capitalised businesses are formed from state capital, only a few private enterprises self-mobilise capital, “said Hong.
In 2018, businesses mobilised about 100 trillion dong of capital through bond channel. However, the bond issuers were mainly large enterprises such as Masan, Vingroup, Hoang Anh Gia Lai, etc. and the buyers were largely financial and banking institutions. Therefore, the current medium and long-term capital mobilisation of the economy still weighs heavily on the commercial banking system.
Nguyen Duy HungChair of SSI Securities Company, said that in order to become a medium and long-term capital channel for businesses, investors need to have confidence and the market needs to be more transparent. “In many countries, personal savings to invest are huge, so they build a mechanism for the stock market to develop in parallel with the banking channel. But in our country, the stock market is seen as a place to sell, make a profit and investors do not consider it as a place to keep money and assets. As a result, the stock market has not been the main capital mobilisation channel for the economy, ” Hung emphasized.
In order for the stock market to be the capital channel for the economy, Pham Hong Son, vice Chair of the State Securities Commission of Vietnam (SSC), said that it was necessary to continue developing solutions and capacity, building the system of market intermediaries; and at the same time establishing the Vietnam Stock Exchange under the Project approved by the prime minister. Accordingly, it was necessary to deploy securities derivatives of futures contracts on a number of new indices and government bond futures contracts, carry out warranted products, and promote solutions to upgrade Vietnam stock market from the frontier market to the emerging market ranked on the MSCI and FTSE charts.
