Repos bound to be hotcake in government securities market

Repos forecasted to grab top spot in government securities market

In 2017, the Hanoi Stock Exchange (HNX) stated that the trading volume of repos escalated to 48.5 per cent of the total trading weight in the government securities market, growing by 74.1 per cent in comparison to the total trading volume in 2016.

Specifically, a hefty VN800 trillion ($35.2 billion) worth of bonds was estimated to be in the hands of the government, resulting in growing demand of repo transactions despite it being cost-intensive and time-consuming.

Do Ngoc Quynh, general secretary of the Vietnam Bond Market Association (VBMA), highlighted that the majority of members of the government securities market acknowledged the importance of repo transactions towards the overall performance of the securities market.

Quynh also added that the volume of repo transactions recorded an upsurge over the last several months, showing signs of a new hot-and-trendy securities trading segment.

Over 2015-2016, repo transactions were constantly overshadowed by forward outrights. In contrast, at the end of 2016, the repo trading segment saw a considerable recovery, constituting of 40 per cent of the total trading volume of the government securities market.

In February 2016, according to statistics provided by HNX, the total repo transaction value hit over 806 million bonds, which was commensurate with VND83.8 trillion ($3.67 billion). Meanwhile, total forward outright trading weight reached over 645 million bonds, equivalent to VND73.9 trillion ($3.23 billion).

Over the span of 2017, the total value of secondary transactions in the G-bond market averaged at VND9-10 trillion ($394.2-438 million) per transaction.

Numerous market analysts forecast that repo trading volume would significantly rise over the next several months. For instance, the total repo trading volume averaged at 80-90 per cent, whereas the forward outrights transaction volume secured a stable rate of 20-40 per cent.