10 outstanding stock events in 2018

Employees inspect Dung Quat Oil Refinery, operated by Binh Son Refining and Petrochemical Company (BSR) in central Quang Ngai Province.-VNA/VNS Photo Ha Thai

1. Stock market declines after 5 consecutive years of growth

This year, the stock market witnessed the choppiest year since the 2008 global financial crisis. The market declined for the first time after five consecutive years of rallying in parallel with the growth momentum of the economy. It achieved a record high gain of 47 per cent in 2017.

The VN-Index, Viet Nam’s benchmark stock index, set an all-time peak of 1,211 points in April 10 this year, but then suffered a sharp decline of 27 per cent, to reach the bottom of 888 points on October 30 despite the fact that Viet Nam’s GDP has posted its strongest growth rate in a decade. The unexpected fall was attributed to objective reasons such as accelerating trade tension between the US and China and the interest rate hike trend of central banks worldwide.

2. Explosion of derivatives market

The derivatives market started official operation on August 10, 2017. After just over a year, the market reached a remarkable growth in scale. At the end of 2017, the trading value of the derivatives market reached VND2.5 trillion (US$107 million) per session, but in October 2018, it soared to a record of nearly VND17 trillion per session. The number of derivative trading accounts has increased 2.2 times compared to the end of 2017.

3. Million-dollar deals

This year witnessed many large-scale acquisitions. The State Capital Investment Corporation (SCIC) and Military-run telecoms group Viettel offloaded their entire stakes, collectively at 79 per cent, in the Viet Nam Construction and Import-Export Joint Stock Corporation (Vinaconex), under the form of a public auction on November 22 on the Ha Noi Stock Exchange, earning VND9.36 trillion from the deal.

Notable IPO deals include the VND5.5 trillion- deal of Binh Son Refinery and Petrochemical Company (BSR), the VND4.1 trillion-deal of the PetroVietnam Oil Corporation (PV Oil), the VND7 trillion-deal of PetroVietnam Power Corporation (PV Power) and the $922 million-deal of the Viet Nam Technological and Commercial Joint Stock Bank (Techcombank).

4. Vietnamese market added to FTSE’s watch list for upgrade

In its annual country classification review published late September, the UK-based data service provider said Viet Nam “is currently classified as a Frontier market and is being added to the watch list for possible reclassification as Secondary Emerging market.”

5. HOSE shut down for 2 days

On the afternoon of January 22, the Ho Chi Minh City Stock Exchange (HOSE) experienced a technical crash, bringing to a halt all trading activities during the rest of the day and also the next two days on January 23 and 24. In the past, HOSE also underwent a similar technical problem and had to shut down for three days in May 2008. This raised the need to renew the market technology platform after 18 years of operation.

6. Billion-dollar firms attract foreign capital

Four firms – Viet Nam’s Housing Development Bank (HDB), Viet Nam Technological and Commercial Joint Stock Bank (TCB), Tien Phong Commercial Joint Stock Bank (TPB) and Vinhomes Joint Stock Company (VHM), were added to the list of the top 30 listed companies with market capitalisation of at least $1 billion in 2018.

The capitalisation of the whole market has risen to its highest level ever, reaching VND4.09 trillion, equivalent to 81.7 per cent of 2017’s GDP. The emergence of large-cap stocks has drawn the attention of foreign investors, with net buying value of $2.9 billion in 2018, approximately equal to 2017’s figure of $2.92 billion.

7. Establishment of a state capital management committee

In September, Viet Nam’s Committee for State Capital Management (CMSC), known as the Super Committee, was officially launched, responsible to the Government for effectiveness in the use of State capital and assets in SOEs. It is supervised by the Government, the National Assembly and law-protecting agencies.

The committee manages 19 State-owned economic groups and corporations with the total value of State equity reaching more than VND1 quadrillion and total asset value of VND2.3 quadrillion.

8. Stock price manipulation face penalties

Cases of stock price manipulation received administrative sanctions. Nine individuals were fined VND550 million each, totalling VND5.1 billion, accounting for more than 25 per cent of the total financial penalties in the market in 2018.

Regarding criminal cases, the Ha Noi People’s Court on October this year opened the first-ever trial in the case of 15 people who were charged with stock trading document falsification, stock price manipulation and fraudulent asset transfers.

The accused included 35-year-old Tran Huu Tiep – former management board chairman of the Central Mining and Mineral Import Export JSC (MTM), 53-year-old Nguyen Van Dinh – former director of the mining firm Nari Hamico, and former officials of the Bank for Investment and Development of Viet Nam (BIDV) and Tien Phong Bank (TPBank).

The defendants were reported to have falsified trading documents of MTM shares on the Unlisted Public Company Market (UPCoM), manipulated MTM share prices and fraudulently transferred MTM stocks on the market.

This is one of three criminal cases that were discovered and prosecuted.

9. Publication of the revised draft Law on Securities

The new amended draft law on securities was revised based on the inheritance of the current Securities Law, broadening the scope of regulations and adopting a new approach more suited to market conditions and overcoming the remaining limitations of the current law.

It is supposed to be submitted to the Government in the second quarter of 2019 and submitted to the National Assembly for consideration and approval in the fourth quarter of 2019.

10. Legal framework for the corporate bond market

In December this year, the Government issued Decree No 163/2018/ND-CP regulating the issuance of corporate bonds, replacing Decree No 90/2011/ND-CP dated December 14, 2011, to create a new legal framework for enterprises to raise capital through the issuance of bonds.

The new decree, coming into force from February 1 next year, aims at creating favourable conditions for enterprises to raise capital through issuing bonds, developing the corporate bond market in the direction of publicity, transparency and protection of interests of private investors, step by step expand the size of the corporate bond market, reducing the burden of raising funds for bank credit.