Vietnam wants 5% of population to own stocks

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Vietnam Wants 5% Of Population To Own Stocks
Ho Chi Minh Stock Exchange
© Arno Maierbrugger

The Vietnam government is encouraging its people to have confidence in the stock market and buy more securities as provision for the future, local media noted. Plans are to raise the number of securities investors to three per cent of the total population by 2020 and five per cent by 2025 from currently 2.2 per cent.

The Vietnamese stock market, which consists of two exchanges in Hanoi and Ho Chi Minh City, respectively, opened 20 years ago and is now seeking to obtaining the “emerging” status until 2025 at the latest to ensure reasonable proportions of institutional and individual investors.

Analysts say the plan was ambitious, but achievable if a few structural reforms and improvements are being put in place. Those include perfecting the legal framework, speeding up equitisation, developing derivatives, restructuring securities companies and setting up more types of investment funds.

However, analysts said the most important factor was improving the liquidity of the market. The measures include widening the price fluctuation band within the day, applying automatic breaking which will activate if the market sees heavy fluctuations and extending the trading time.

What also needs to be improved would be the accessibility of the Vietnam stock market for foreign investors as most private banks and wealth managers are still unable to buy or sell Vietnamese equities directly. Foreign investors have to apply for so-called securities trading codes for a security deposit which are granted on a monthly basis and currently stand at a total of 29,454.

The government seeks to accelerate the issuance of those trading licenses. The exchanges granted 5,537 securities trading codes to foreign investors in 2018, 2,300 more than 2017. Last year, foreign investors pumped a net value of 41.7 trillion dong (around $1.8 billion) into Vietnam’s securities market, a rise of 61.3 per cent.

Overall, the outlook for Vietnam’s stock market is bright. Vietnam has surged to become Southeast Asia’s best-performing stock market this year, posting a 12 per cent gain for the benchmark VN index on the Ho Chi Minh Stock Exchange. According to Bloomberg data, Vietnam was the third-best performing market globally over the past five years.

The country’s ongoing economic reforms combined with recent geopolitical developments have certainly bolstered the country’s outlook. The World Bank expects Vietnam to be among Asia’s fastest-growing economies this year, with the country’s GDP growth rate forecast to reach 6.6 per cent.

According to banking statistics, more than 200 Vietnamese citizens now have investable assets of at least $30 million. Having expanded by 320 per cent between 2000 and 2016, Vietnam’s wealthy class is growing faster than that of India and China. And if current trends continue, it will have grown by another 170 per cent from 14,300 to some 38,600 millionaires by 2026.

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Ho Chi Minh Stock Exchange © Arno Maierbrugger The Vietnam government is encouraging its people to have confidence in the stock market and buy more securities as provision for the future, local media noted. Plans are to raise the number of securities investors to three per cent of the total population by 2020 and five per cent by 2025 from currently 2.2 per cent. The Vietnamese stock market, which consists of two exchanges in Hanoi and Ho Chi Minh City, respectively, opened 20 years ago and is now seeking to obtaining the “emerging” status until 2025 at the latest to...

Reading Time: 2 minutes

Vietnam Wants 5% Of Population To Own Stocks
Ho Chi Minh Stock Exchange
© Arno Maierbrugger

The Vietnam government is encouraging its people to have confidence in the stock market and buy more securities as provision for the future, local media noted. Plans are to raise the number of securities investors to three per cent of the total population by 2020 and five per cent by 2025 from currently 2.2 per cent.

The Vietnamese stock market, which consists of two exchanges in Hanoi and Ho Chi Minh City, respectively, opened 20 years ago and is now seeking to obtaining the “emerging” status until 2025 at the latest to ensure reasonable proportions of institutional and individual investors.

Analysts say the plan was ambitious, but achievable if a few structural reforms and improvements are being put in place. Those include perfecting the legal framework, speeding up equitisation, developing derivatives, restructuring securities companies and setting up more types of investment funds.

However, analysts said the most important factor was improving the liquidity of the market. The measures include widening the price fluctuation band within the day, applying automatic breaking which will activate if the market sees heavy fluctuations and extending the trading time.

What also needs to be improved would be the accessibility of the Vietnam stock market for foreign investors as most private banks and wealth managers are still unable to buy or sell Vietnamese equities directly. Foreign investors have to apply for so-called securities trading codes for a security deposit which are granted on a monthly basis and currently stand at a total of 29,454.

The government seeks to accelerate the issuance of those trading licenses. The exchanges granted 5,537 securities trading codes to foreign investors in 2018, 2,300 more than 2017. Last year, foreign investors pumped a net value of 41.7 trillion dong (around $1.8 billion) into Vietnam’s securities market, a rise of 61.3 per cent.

Overall, the outlook for Vietnam’s stock market is bright. Vietnam has surged to become Southeast Asia’s best-performing stock market this year, posting a 12 per cent gain for the benchmark VN index on the Ho Chi Minh Stock Exchange. According to Bloomberg data, Vietnam was the third-best performing market globally over the past five years.

The country’s ongoing economic reforms combined with recent geopolitical developments have certainly bolstered the country’s outlook. The World Bank expects Vietnam to be among Asia’s fastest-growing economies this year, with the country’s GDP growth rate forecast to reach 6.6 per cent.

According to banking statistics, more than 200 Vietnamese citizens now have investable assets of at least $30 million. Having expanded by 320 per cent between 2000 and 2016, Vietnam’s wealthy class is growing faster than that of India and China. And if current trends continue, it will have grown by another 170 per cent from 14,300 to some 38,600 millionaires by 2026.

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