Stock market support

The reducing and waiver of securities services fees would last until June 30, 2021.

Vietnam’s Ministry of Finance (MoF) has decided to extend the validity period of Circular No.14 that exempts fees for six securities services and lowers the fees for nine others for another 10 months to June 30, 2021 in a move to support traders.

Vietnam’s finance ministry has decided to extend a support program for the stock market.

The free services include registration for listing; securities registration; securities borrowing and lending via the Vietnam Securities Depository (VDS); membership registration for derivatives transaction; registration for clearing participant; and first time online connection.

Meanwhile, nine other securities services are subject to reductions from 10% to 50% of the current fees, including a 10% reduction for transaction fees on the share and derivatives market, securities depository; 15 – 20% reduction for position management fee, management of margin assets on the derivatives market; 30 – 50% reduction for management of covered warrants after listing, information registration, stock transfer, auction and competitive offering.

Circular No.14 was enacted on March 18 and was initially set to take effect until August 31 to help stock investors overcome impacts of the Covid-19 pandemic.

At the close today, Vietnam’s benchmark VN-Index plunged 5.3% to 785.17 as news about the local coronavirus infections in Danang spooked investors. This was the sharpest drop among stock markets globally during Monday’s trading session.

HCM City (VNS/VNA) – Vietnam’s stock market is expected to maintain its growth momentum of last year at 15-20 percent based on positive supporting factors, experts have said.

Speaking at a seminar on opportunities and challenges for the stock market in 2021 held recently in Ho Chi Minh City, Can Van Luc, chief economist of the Bank for Investment and Development of Vietnam , said “Vietnam has successfully implemented the dual goal of containing the COVID-19 pandemic and reviving the economy.

“With its economic recovery momentum, most organisations forecast that Vietnam’s economic growth is likely to surge to 6.5‐7 percent in 2021. And at the same time, we can control inflation well at below 4 percent.”

In this context, domestic and foreign investment flows to the country will be stronger than those of last year, he said.

The number of new trading accounts opened more than doubled last year, driven by the desire of local investors to achieve higher returns as the interest rates paid on their bank deposit accounts plunged. And the momentum will continue this year, he added.

Dr Vo Tri Thanh, director of the Central Institute for Economic Management , said that production and trading activities have been maintained and export growth has recovered quickly, while the new generation of free trade agreements will also increase export and investment cooperation.

This will help promote the stock market in 2021 and the years to come, he said.

Dang Duc Thanh, chairman of the Economists Club, said: “With the Government’s promotion of public investment, policies to attract FDI investment, maintenance of low interest rates, adjustment of economic stimulus packages, and effective control of COVID-19, it has made an important contribution to boost the stock market’s growth.”

The VN-Index surpassed 1,200 points on March 18, creating optimism among investors, he said.

Dr. Nguyen Son, chairman of the State Securities Commission’s Vietnam Security Depository, said that: “Having vaccines to prevent COVID-19 and the trend of shifting international capital flows from the banking sector (which yields low interest rates) to other investment channels such as stock and valuable assets such as gold and real estate will help the global stock market in general and Vietnam’s stock market , in 2021.

“Vietnam continues to be evaluated as a bright spot for regional investment by international organisations as it is one of the few countries that has effectively controlled COVID-19 and achieved positive growth in 2020,” he said.

He said the VN-Index would increase by hundreds of points this year.

Despite many opportunities, the stock market in 2021 still faces risks, notably the unpredictable development of COVID-19, an increase in trade defence globally, risks involved in inflation and exchange rates, and diversion of investment flows to other areas, they said.

Son also mentioned problems faced by the Vietnamese stock market, such as the slow process of equitisation of State-owned enterprises and divestment of State capital in equitised enterprises. Moreover, the upgrading of the market from frontier to emerging status still faces obstacles and the current IT system has not met the fast development of the securities market.

To enable the market to develop in a sustainable manner, the securities sector will focus on putting new regulations and policies in the Law on Securities into practice to support businesses and protect the legitimate rights and interests of investors, he said.

It will also map out a Stock Market Development Strategy for the 2021-30 period to shape goals, solutions and a roadmap for the development of the stock and capital market in the long run, he said.

In addition, the sector will enhance the modernisation of information technology systems and administrative procedure reform, launch new products, restructure the security market, and speed up equitisation and divestment of State capital in State-own enterprises and the listing of these firms on the stock exchange to increase market liquidity and supply, he said.

At the seminar, which was held by the Economists Club, Ho Chi Minh Securities Corporation (HSC) and Green Plus Joint Stock Corporation, Green Plus signed a cooperation agreement with Japan’s Sato Yakuhin Kogyo, HSC, and Vietcombank’s Binh Tay branch./.

VNA

Money has not been withdrawn from the market yet

After the Lunar New Year, foreign investors had net sold for 24 trading sessions, creating considerable pressure on Vietnam’s stock market. Explaining the fact that foreign investors were net sellers on Vietnam’s stock market in the context that Vietnam has controlled the Covid-19 pandemic, and economic activities have recovered well, experts said that in general, the above move is that foreign investors only restructure investment portfolio after a period of rapid growth in Vietnam’s stock market.

Because this sector had disbursed in the period when the VN-Index was around 600-700 points. By the end of 2020, the benchmark approached 1,200 points, surpassed the historic peak of 1,200 points on April 1 this year, and is constantly setting new peaks, causing the Price to Earnings Ratio (P/E) of the stock market to increase by 17-18 times. The investment portfolios were profitable so foreign investors net sold to take profits. In March this year alone, foreign investors net sold nearly VND14 trillion on the Ho Chi Minh Stock Exchange (HoSE) due to network congestion.

Mr. Tran Hoang Son, Manager for Market Strategy of MB Securities Company (MBS), said that not only in Vietnam, but foreign investors had also withdrawn more than US$100 billion from emerging markets. Besides, this trend continued to prolong in the first months of this year because the US long-term Government bond yields continued to increase, causing the currencies of emerging markets, such as Turkey, South Korea, and Brazil, to devalue against the US dollar. This urged foreign investors to quickly withdraw money from the stock market to preserve their capital.

For instance, South Korea’s won decreased by about 4 percent compared to the US dollar, causing the Korea Investment Management Fund (KIM) to have withdrawn more than $60 million from Vietnam’s stock market so far this year. Besides, other stock markets, such as the US and Japan have a better growth potential than Vietnam’s stock market as the governments of these countries launched many stimulus packages that made their stock markets increase strongly. In addition, many foreign investors evaluate that the scale of capital injection to support the Vietnamese economy is not large, so they consider the investment. Along with that, China tends to lower financial leverage, reduce money supply because of concerns about the risk of bond default. This has affected the Asian stock market, thereby causing net selling pressure of the foreign sector on Vietnam’s stock market.

Analyzing further, the representative of the Vietnam Securities Depository Center (VSD) said that besides investment portfolio restructuring, foreign investors also net sold because of concerns about exchange rate fluctuations. However, previously, foreign investors held 21-22 percent of the total number of shares circulating in the market, and currently, they have only drawn about 3 percent. Noticeably, foreign investors were net sellers but they still kept cash in their accounts, instead of withdrawing capital from the market and waiting for disbursement at the time when the market makes corrections. Currently, the amount of cash that foreign investors left on their accounts is about $2.7 billion, while the figure was $1.2 billion at the end of last year.

Foreign capital will soon return

An analyst of Rong Viet Securities Company (VDSC) said that although foreign investors maintained their net selling for more than one year, this is an insignificant risk, thanks to the strong participation of domestic individual investors and new foreign funds. Specifically, at the end of March this year, a new exchange-traded fund from Taiwan (China), Fubon FTSE Vietnam, conducted an IPO and raised 5.28 billion New Taiwan dollars (roughly VND4.28 trillion).

Earlier, Fubon FTSE Vietnam planned to mobilize up to 10 billion New Taiwan dollars (about VND8.1 trillion) to invest in Vietnam’s stock market. Because this fund references the FTSE Vietnam 30 Index, this capital flow will likely create a boost for stocks in the VN30-Index basket, which account for 40-50 percent of the VN-Index’s trading value and contribute to fortifying the rising momentum of the benchmark in the coming time. Besides the appearance of the exchange-traded funds, forecasts of many securities companies show several positive signals in the near future. Specifically, the VFM VN30 ETF has stopped withdrawing money and pumped money continuously into the market from March 25; the VFMVN Diamond ETF with a net value of $424 million has continuously attracted cash flow from foreign investors since early 2021 with a total value of nearly $95 million.

Experts also stated that many net foreign capital flows would soon return this year when MSCI officially upgraded rating for the Vietnam stock market. This will help Vietnam attract more capital flows of investment funds. And yet, after the VN-Index officially surpassed the peak of 1,200 points in 2018, foreign investment funds expected the benchmark to rise to 1,300-1,400 points in 2021.

Recently, the US Treasury Department has officially withdrawn Vietnam from the list of currency manipulators, which will also be the driving force to attract capital again. However, the overloading of the trading system on the HoSE remains an existing risk. If the State Securities Commission and the HoSE resolve this issue soon, transactions of foreign investors will be more vibrant shortly, including active investment funds and ETFs.

Viet Nam’s stock market increased on Tuesday as many large-cap stocks rebounded in the afternoon session.

The market benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) rose 0.91 per cent, equivalent to 10.68 points, to 1,186.36 points. The market breadth was back to positive as 270 stocks climbed while 165 stocks declined. It was quite volatile in the morning session as big stocks faced strong selling pressure, limiting the upward trend.

The market’s liquidity was also high with over 780.73 million shares being traded on the south bourse, worth nearly VND16.95 trillion.

Earlier, in a daily report to investors, analysts from Bao Viet Securities Co. expected that the VN-Index might fall as it tries to test the resistance level of 1,180 – 1,185 points in this session.

“In general, after recovering from the supportive territory of around 1,150 points, the index continues to fluctuate sideways at 1,150 – 1,200 points. This trend might continue in the near term,” Bao Viet said.

“The cash inflows will focus on small-cap and mid-cap stocks. Large-cap stocks will recover some how, but the main trend is still sideways accumulation.”

The VN30-Index also increased nearly 10.8 points, equivalent to 0.91 per cent, to 1,190.86 points. Of the 30 biggest stocks in the VN30 basket, twenty rose, of which one stock hit the maximum daily gain of 7 per cent, while eight stocks slid and two stocks stayed unchanged.

Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank, STB) was the stock with the biggest daily gain, up 6.77 per cent.

Real estate, banking and materials stocks continued to dominate the market’s trend yesterday. Top five stocks influencing the rally were Vingroup JSC (VIC), Masan Group (MSN), Viet Nam International Commercial Joint Stock Bank (VIB), STB and SeABank (SSB).

SSB shares still maintained their outstanding performance as they hit the biggest daily gain for five consecutive sessions since debuting on HoSE last Wednesday.

Meanwhile, Vietcombank (VCB) posted the biggest loss on Tuesday, down 0.52 per cent. Stocks in retails sectors also had poor performance.

Gas and oil stocks like PetroVietnam Power Corporation (POW) also bounced back in the afternoon session after plunging in the morning trade despite crude prices surging in the global market.

On the Ha Noi Stock Exchange (HNX), the HNX-Index edged higher on large-cap stocks, up 1.8 per cent to 281.14 points. The HNX30-Index climbed 2.17 per cent to 415.47 points.

Domestic investors poured over VND2.78 trillion into the northern market, equivalent to a trading volume of nearly 169.2 million shares.

Regarding foreign investors, they net sold a value of VND196.55 billion. Of which, they net sold a value of VND286.96 billion on HoSE while net bought a value of VND76.67 billion on HNX and VND13.74 billion on UPCOM. — VNS