Since the first trading session of the Hochiminh Stock Exchange (HOSE) took place on July 28, 2000, the scale of the market and participation of investors have significantly expanded.
As one of the first market operators, Dr Tran Dac Sinh, Chairman of the Board of Directors of HOSE, talked about the 12-year journey of ups and downs of the Vietnamese primary exchange.
You have worked for the Vietnamese stock exchange since the very beginning. What do you think about the current market context?
The economy has been facing grave difficulties from the beginning of this year. Deflationary risks exist, consumer demand plunges, and inventories surge. In this context, the negative note of the stock market is understandable. The market benchmark has declined and many stocks have been traded below the par value, while liquidity has drained.
What worries me most is the market liquidity. It is quite normal to see the market go up or down because it reflects the performance of companies and the health of economy. However, when the market loses liquidity, market operators are beset by worries because liquidity mirrors investor confidence and is the groundwork for companies to use the stock market to raise funds. Good liquidity makes prices reflect real supply and demand rather than be distorted by manipulative and price-driving transactions.
It is undeniable that governmental macroeconomic policies affect cash flows into the stock market, but as a market operator, apart from recommending macroeconomic policies, we are always interested in solutions to enhance market liquidity.
They are activities to boost fairness, openness and transparency on the market, and the polling for best annual reports of listed companies since 2007 is a typical example.
Besides, we have introduced technical solutions to trading and supply like online trading, extended trading time, market order, new index and derivatives.
In my opinion, the Government's flexible monetary policies, in harmonious coordination with monetary and fiscal policies of the State Bank, are radical long-term measures to support the sustainable development of the stock market.
What is the biggest problem the Vietnamese stock market is facing?
After a period of strong growth, Vietnam's stock market is confronting many problems that any young emerging market has.
Specifically, laws on securities and stock market are slowly issued and fail to keep up with market development. Intermediary organisations are not professionally operated, and governance and risk management are poor. Market makers have not been able to centralise their resources for stock market infrastructure investment, especially in technology.
I think the biggest challenge is the transition from an extensive development to intensive development driven by restructuring.
After 12 years of development, the market has more than 100 securities companies, two stock exchanges, more than 700 listed companies, and 131 companies registered for trading. The Vietnamese stock market necessarily changes to focus on quality and the ongoing restructuring is aimed at that purpose. However, ironclad actions are necessary to reduce 100 securities companies to a few dozen. We must be flexible and skilful enough in this approach.
The merger of the two exchanges must resolve concerns over interests and the listed market restructuring needs a transitional period. Once we identify market issues and our goals, I believe that we will do well in accordance with international rules and market laws.
As a market operator, what concerns you about being able to support businesses and investors?
Because Vietnam's stock market is not a developed market, even not rated an emerging market like other ones in the region, I personally and management agencies as a whole cannot do many things.
For businesses, we have not organised international events to catch the attention of foreign investors and companies in Vietnamese listed companies and the stock market. Currently, we are learning experience from regional stock exchanges like Invest Malay, Invest ASEAN or Thailand Focus, to organise similar events for Vietnam.
For investors, knowledge dissemination is not systematic, although new technologies are deployed and new goods are supplied. To train investors and disseminate knowledge systematically, we will set out specific development strategies for the coming time.
VNE
Vietnamese
