Market set to heat up

January 08, 2013 | 15:54
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Vietnam’s young securities market in 2012 experienced a rough ride after 12 years of development, but it also witnessed a record amount in money raised, reaching VND170 trillion ($8.2 billion).

State Securities Commission (SSC) chairman Vu Bang talks with VIR’s Huu Hoe about those two extremes and the body’s policies to support the market in 2013.

Many observers claim the securities market in 2012 faced its toughest ever year. Do you agree?
It’s true that the stock market in 2012 had to face the biggest difficulties in its more than 12 years of developing. Foreign indirect investment (FII) inflows from the beginning of 2012 to the end of the year’s October declined 60 per cent year-on-year.

Securities companies took losses, leading to violations in ethics in this sector as well as acts of abusing investors’ cash and securities. In 2012, more than 50 per cent of 105 securities companies suffered losses for the fiscal year and more than 70 per cent got hit with accumulative losses.

However, at the close of 2012, the securities market witnessed considerable bright points. The most noticeable point was that the money amount raised via this channel had reached the highest-ever level of VND170 trillion ($8.2 billion) in that year, up more than 40 per cent to compare with 2011’s total. The money raised via the bond channel reached VND160 trillion ($7.7 billion), more than doubling that in 2011. The market liquidity improved, rising by about 40 per cent year-on-year. Despite many negative factors, the VN-Index still increased 17.7 per cent in 2012. FII inflows in November and December extraordinarily surged, reaching more than $230 billion with the whole 2012’s amount advancing 25 per cent against 2011.

Regarding the work of restructuring securities companies, is there any “restricted zone”?
There is no “restricted zone” at all in the work of restructuring securities companies. SSC is under no pressure from any entity, although securities companies  found some ways to influence authorities.

What will be the focus of securities companies restructuring work in 2013?
The second phase of restructuring securities companies will start in 2014, on the base of achievements in 2013. The focus of this phase will be advancing standards of establishing and running securities companies. There will be stricter conditions on financial safety and risk managements for the companies.

What do you think about the prospects of open-ended funds in 2013?
In the context of continuingly difficult macro-economy and securities market, it’s hard for open-ends to advance this year. The experiences of other countries show that open-end funds need six years of developing to reach essential levels and get see advances The Ministry of Finance (MoF) is cooperating with other ministries and authority bodies to build voluntary pension funds. At the same time, we continue encouraging the bond market to help diversify open-end funds and enhance their development.

According to the plan to restructure the securities market submitted to the prime minister at the end of 2012, the work of restructuring stock exchanges will finish in 2015. Will this timeline change due to the securities market’s difficulties?
The market difficulties from 2011 up to now have somewhat impacted this timeline. The MoF and SSC asked the government to delay stock exchange restructuring by a year. Therefore, the restructuring plan will be submitted later in 2013. Once the plan gets approval, it will be kicked-off in 2014.

The SSC is seeking measures for supporting companies on the securities market. Can you provide any details?
The SSC is considering three measures of unbinding difficulties for companies and for the market. The first measure is unbinding difficulties for companies in raising funds via the securities market. The intention is to lift issuing and listing standards and the SSC will seek new measures for this. The first suggestion is allowing companies to issue shares at prices of lower than par value. The second measure is creating favourable conditions for merging and acquiring companies.

The third measure is  attracting foreign investments to boost demand on the securities market. One of our considerations is non-voting shares for foreigners, or classifying non-essential companies to have rational caps for foreign ownership.

Will the securities market in 2013 be brighter than that in 2012?
Due to continuing difficult global and local economic conditions, the securities market will continue facing significant challenges in 2013. However, if the work of resolving the three biggest ongoing challenges including bad debts, inventories and freezing credit gains big achievements in 2013, there will be considerable power for the securities market.  That remains a big unknown factor for the market in 2013.

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