Top 10 events of the Vietnamese securities market in 2020

Illustrative image (Photo: VNA)

Hanoi - The following are the top 10 events of the Vietnamese securities market in 2020, selected by the Securities Journalist Club of Vietnam.

1. Spectacular recovery amid COVID-19 pandemic

Worries about the COVID-19 pandemic and its impact on the global economy sank the Vietnamese market by total 33.51 percent in two months to the three-year low in March.

After the virus spread was successfully contained, the local market has made significant rebound in the last nine months by nearly 60 percent to more than 1,080 points at year-end.

The VN-Index was also the world’s fastest-growing index in September and October.

2. Record-high newbie investors

The containment of the coronavirus and low bank saving rates have encouraged people to seek opportunities in the stock market, boosting the number of new investors joining the market to a record high.

At the end of November, the total number of new trading accounts in 2020 reached nearly 332,900 – of which domestic inpidual investors created more than 329,400 accounts.

The participation of inpidual investors has also helped lift the market trading liquidity to more than 10 trillion VND in December 2020.

3. Booming corporate bond market

Data of the Hanoi Stock Exchange showed that local companies had raised 348.4 trillion VND from selling private corporate bonds at November-end.

The figure was equal to 68.5 percent of the total amount offered on the market and beat 2019’s total number by 25 percent.

The corporate bond market only cooled down when Decree 81/2020/NĐ-CP took effect on September 1 to tighten the issuing requirements and better protect investors.

4. Vietnam's market topped MSCI’s frontier market portfolio

The Vietnamese stock market in early December officially had the highest proportion in Morgan Stanley Capital International’s frontier markets basket after Kuwait got upgraded to the emerging markets level.

Vietnamese shares would account for up to 15.76 percent of MSCI’s frontier markets basket by 2020-end and 28.76 percent by 2021-end.

The positive movement may lure more foreign capital, which is flowing into investment funds tracking the MSCI Frontier Markets 100 Index.

5. Firms pay tax for share-receiving inpiduals

Decree 126/2020/NĐ-CP regulating the implementation of the Law on Tax Management took effect on December 5 and demanded companies pay income tax for inpiduals that receive bonus shares or contribute to the capital in land properties, securities and cash.

The controversial policy stormed the market as investors and brokerages thought it was unreasonable to tax the bonus shares that were not profitable yet while it would be difficult for securities firms to tell bonus shares from already-bought shares.

6. The robustness of local ETF investment

The COVID-19 pandemic has contributed to the outflow of foreign capital from emerging and frontier markets since February, including Vietnam. At November-end, foreign investors had sold total 16.3 trillion VND.

The foreign capital withdrawal has been countered by the strong investment into local exchange-traded funds (ETFs). According to the Ho Chi Minh Stock Exchange (HoSE), local ETFs have drawn VNĐ4 trillion worth of purchases from both domestic and international investors.

7. Vietnam Airlines to be rescued

The National Assembly on November 17 passed a Government proposal to provide financial aid for the national flag carrier Vietnam Airlines – whose business operation had been hit by the COVID-19 pandemic.

The proposal allows Vietnam Airlines to borrow 4 trillion VND at an interest rate of 4 percent per annum to boost its business operation. In addition, the company is approved to sell shares to current shareholders and raise charter capital by 8 trillion VND.

8. Record growth of derivatives market

The derivatives market made some big steps after four years of operation as a protective tool for investors amid the global market volatility caused by the COVID-19 pandemic, encouraging investors to use VN30 futures as risk-hedging instruments instead of selling off local stocks.

The market saw the number of futures contracts traded hit the record high of more than 356,000 on July 29 and the number of open interest (OI) contracts peaked at more than 52,760 on November 10.

9. Legal framework completed

Based on the approval of amended Law on Securities in 2019, several legal documents were completed during the year to serve the implementation of the new law on January 1, 2021.

The new law and its sub-policies are expected to improve the quality of commodities and listed companies, draw more capital from both international and domestic investors, enhance the market transparency and sustainability, and better oversee the market operation and protect shareholders.

10. 20th anniversary of the market

The Vietnamese securities market marked its 20th anniversary in 2020. From only two listed companies, six securities firms and a few thousand investors in July 2000, the local market has seen its capitalisation reach nearly 200 billion USD, 30 listed firms with market value of more than $1 billion each, and more than 2.7 million trading accounts.

The stock market is also a chance for companies to raise capital. On HoSE, more than 80 per cent of the listed firms have been able to increase capital by a total of more than VNĐ295 trillion in their post-listing period.