At the conference on stock market development tasks in 2013 hosted by the State Securities Commission of Vietnam (SSC), economic specialists discussed and assessed the stock market performance in 2012, and put forth solutions to remove difficulties to bring the stock market to a new level of development. Many ideas and plans were revealed in this conference. The Vietnam Business Forum has an interview with Mr Vu Bang, SSC Chairman on this issue. Si Son reports.
In 2012, violations soar
The Vietnamese stock market was very volatile last year. What is your opinion about the market last year?
In 2012, the Vietnamese stock market underwent ups and downs but it indeed looked not too bad if it was placed in the macroeconomic situation. VN-Index sometimes surged, sometimes plunged and sometimes moved sideways but it still advanced more than 17 per cent in the year (climbing 351 points on December 30, 2011 to 413 points on the last day of 2012).
Meanwhile, in 2012, Japan’s Nikkei 225 Index rose only 11 per cent, US’s Dow Jones Industrial Average Index added 8 per cent while China’s primary index slid 8 per cent over the previous year. As for difficulties, we are starting to solve them and I believe that they will be removed gradually.
The market did not improve much in 2012 but internal uncertainties seemed to worsen. Could you tell us more about this?
The year 2012 witnessed the most violations on the local stock market. The State Securities Commission of Vietnam (SSC) issued more than 180 decisions and fined VND11 billion in total. Many complicated problems emerged last year were handled strictly and promptly. The commission inspected and discovered serious violations committed by a securities company and handed the case to the police force for further procedure.
In addition, 58 publicly traded and listed companies were fined for violating the laws on information disclosure and reporting. The SSC issued five verdicts to fine five auditors violating the laws.
What did the SSC do to resolve these problems thoroughly? How are they?
We have embarked on strong restructuring of the stock market, which will focus on equities, exchange, market, institutional and individual investors. The Law on Securities, statutory decrees and circulars issued helped uplift standards and requirements for listed companies. Particularly, the reporting mechanism on corporate governance and information disclosure are approaching international standards.
The Ministry of Finance also issued documents concerning open-ended funds, securities investment companies, real estate investment funds, and exchange-traded funds (ETFs) to attract more institutional investors. The ministry is implementing a voluntary pension funds.
To date, the biggest problem the SSC made is legally resolve is the eradication of many weakness securities companies. As many as 13 companies have been added to the special control list and companies have brokerage licences revoked. The priority objective is to enhance the quality of securities companies.
Thus, the SSC has completed documents on corporate governance information disclosure and risk management at securities companies; and will introduce an early warning system in accordance with international practices. These basic contents have completely drafted and will be issued in January 2013. In the next phase, securities will be required to have higher capital and financial base but the application will be based on a rational roadmap to avoid making securities companies shocked.
Stock market will be better in 2013
What about major market support solutions for the coming time?
Vietnam will still see macroeconomic difficulties and challenges in 2013. Thus, our objectives are to overcome difficulties, continue stabilising the market, and continue restructuring the stock market to prepare the foundation for the market development when the macro economy recovers. The SSC also has drafted eight groups of measures to submit to the Ministry of Finance. We have reported this to the ministry’s leaders and have initial guidance. In particular, we proposed removing securities business out of non-manufacturing groups as it helped boost market sentiment. Besides, we proposed allowing companies to offer shares at a price lower than par value when they raise capital via the stock market. To increase liquidity, the SSC, within its authority, decided to raise margin lending ratio to 50-50.
We also decided to raise the daily trading bands to the previous values (to 10 per cent on the Hanoi Stock Exchange (HNX) and 7 per cent on the Hochiminh Stock Exchange (HOSE). The widening will help improve the market liquidity. The Ministry of Finance also cut custody fees by 20 per cent.
Regarding foreign investors, the SSC proposed allowing foreign strategic investors to raise the stake to above 49 per cent in some types of listed companies not included in prohibited industries. Foreign investors with more than 49 per cent of stake will have no voting rights.
Based on proposals of related parties, foreign investors can be allowed to hold from 49 per cent to 100 per cent of stake in securities companies. We will also ask the State Bank to widen the ownership room of commercial banks.
On tax issue, the State Securities Commission and the Ministry of Finance proposed the Government to submit continued securities tax exemption in 2013 to the National Assembly for approval to encourage market and business development.
How do you forecast the stock market in 2013?
Though difficulties remain in 2013, we have every reason to believe that the stock market will be better than the year earlier. The economy is expected to promote the results gained in 2012, including inflation control, improved trade deficit, increased forex reserves, stabilised exchange rates, and reduced interest rates.
Meanwhile, the government is restructuring the economy, enterprises and public investment and gradually troubleshooting hardships in bad debt settlement. The stock market is the place enterprises raise long-term capital and thus reduce reliance on bank loans.
The development of the stock market development will revitalise the real estate market and make it easier to handle bad debts. The stock market also plays an importance role in bad debt handling, economic restructuring, and SOE reshuffle.
Thank you very much!
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