Vietnam bond market continues growth

The domestic bond market of Viet Nam made US$52.9 billion in the second quarter of this year, marking a year-on-year increase of 2.6 per cent. - Photo Vietnamplus

This information was part of the latest report of the Asian Development Bank’s (ADB) Asia Bond Monitor.

The report shows Viet Nam’s growth was mainly on the back of the 3.2 per cent expansion of the Government bond market to $48 billion due to issuance of Treasury bonds and central bank bills.

“The growth in the Government bond market offset the 3.4 per cent contraction of the corporate bond market during the second quarter of 2019 to $5 billion,” the report said.

According to the report, emerging East Asia’s local currency bond market expanded steadily in the second quarter of 2019 despite downside risks stemming from ongoing trade conflicts, a faster-than-expected economic slowdown in the People’s Republic of China (PRC), and moderating global growth.

Emerging East Asia countries and territories comprises of Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; Thailand and Viet Nam.

ADB Chief Economist Yasuyuki Sawada said foreign investment in emerging East Asia remains stable but there are still considerable potential risks. Financial stability in the region could be undermined if global investors change their views on emerging markets.

“Governments in the region would do well to continue to deepen local currency bond markets so they can act as a reliable local source of funding,” Sawada.

Local currency bonds outstanding in emerging East Asia totalled $15.3 trillion at the end of June, up 3.5 per cent in US dollar terms from the end of March this year and 14.2 per cent higher than the end of June 2018. Bond issuance in emerging East Asia totalled $1.6 trillion in the second quarter, 12.2 per cent higher than in the first quarter due to strong issuance of government bonds and a recovery in corporate bonds issuance.

The PRC remained emerging East Asia’s largest bond market, accounting for 75.3 per cent of the region’s total outstanding paper.

At the end of June, there were $9.4 trillion in local currency government bonds outstanding, 13.6 per cent higher than at end June 2018. The stock of corporate bonds was $5.8 trillion, up 15 per cent compared with end June 2018.