Stock Market Highlights in 2013

Although the economy experienced a turbulent year with a lot difficulties, the Vietnamese stock market still achieved impressive growth. In 2013, the VN-Index rose 21.97 percent and the HNX-Index climbed 18.83 percent. The VN-Index was thus one of 10 best performers in the world last year.

 

The market capitalisation increased by VND184 trillion in 2013 to VND949 trillion, equivalent to 31 percent of the country’s GDP.

 

The daily trading value averaged VND1.38 trillion and 107.63 million shares changed hands, an increase of 6 percent over 2012.

Notably, the daily transaction value of government bonds in 2013 was VND1,257 billion, an increase of 90 percent against 2012.

 

In 2013, government bond proceeds totalled VND194.8 trillion, up 10 percent year on year - the highest growth in the region.

 

Privatisation brought in VND17.5 trillion, up 5 percent over 2012. Secondary equity offering in private placement totalled VND24 trillion.

 

Foreign investors bought net nearly VND7,667 billion of shares (VND6,330 billion was spent on HOSE-listed shares and VND1,337 billion was spent on HNX-listed shares), with more than 220 million shares purchased.

 

In 2013, Vietnam's stock market also welcomed the new wave of foreign investment funds, including Mutual Elite Fund and Asia Small Cap Fund. Frontier Capital Asia Fund established a US$50 million fund to invest in the Vietnamese stock market.

Total foreign capital turnover on the stock market in 2013 increased US$3.8 billion compared with the end of 2012, equivalent to 54 percent. Investors' accounts reached 1.27 million. Individual foreign investors' accounts soared 55 percent last year.

 

2013 was also the tough and changing year in the stock market, especially for securities brokerage houses. The unfavourable market was a chance for the stock market to screen for good players. The State Securities Commission of Vietnam (SSC) classified securities companies into four groups of securities companies. As many as 79 companies had healthy operations, eight companies had normal operation, five companies were put under control and nine companies were under special control. As of the end of 2013, 15 securities companies ended operations.

 

Four securities companies were dissolved, namely Sao Viet Securities Corporation (SVS), Cho Lon Securities Joint Stock Company (CLS), Au Viet Securities Corporation (AVS) and Golden Lotus Securities Joint Stock Company (GLS), but only GLS was allowed to be dissolved under the Law on Enterprises. Four securities companies were delisted from the stock market, including SVS, Sacombank Securities Joint Stock Company (SBS), Golden Bridge Vietnam Securities Joint Stock Company (GBS) and Trang An Securities Joint Stock Company (TAS). Two securities companies - GBS and SME Securities Corporation (SME) - were forced to suspend operations, while Delta Securities Joint Stock Company, Hanoi Securities Company and Truong Thanh Securities Company terminated operations.

 

Though trading volume was higher than in 2012, up to 63 percent of securities brokers suffered losses in 2013. However, some brokerage houses outdid their plans, including Bao Viet Securities Company (BVS), VNDirect Securities Corporation (VNDS) and Vietcombank Securities Company (VCBS). Some others also made huge profits like Ho Chi Minh City Securities Corporation (HSC), Saigon Securities Inc (SSI), VPBank Securities Company (VPBS), TechcomSC and Kim Long Securities Corporation (KLS).

 

In 2013, three investment funds in Vietnam had to be dissolved, specifically Prudential Balanced Fund 1 (PRUBF1), Bao Viet and Sabeco Fund Management Company but the State Securities Commission also licensed 10 new funds, including Vina Wealth, MBBF, Bao Viet BVFED, VCFB of Vietcombank, VFMVFA, VFMVF1 and VFMVF4.

According to the SSC, as of the end of the third quarter of 2013, 41 out of 47 fund management companies were active, of which only 22 were operating with a profit, six were handled with various solutions and withdrew from the market, including one being dissolved, two temporarily halted operations, one was suspended, and two were placed under special control because of failure in financial adequacy ratio.

 

In 2013, a record of 37 companies were delisted, 11 companies on HOSE and 26 on HNX. Delisted companies included big names like PetroVietnam Finance Corporation (PVF) which was merged with Western Bank and SBS.

 

Last year, only four new companies were listed on HOSE, while 11 companies floated shares on HNX.

 

2013 also marked the SSC’s efforts to regain the investor confidence in the market. Accordingly, a series of new policies were applied in the past year, including the widening of margin loan ratio to 50-50 applicable from February 1, 2013, the widening of trading band to 7 percent on HOSE and to 10 percent on HNX applicable from January 15, 2013, and longer trading hours in an effort to improve market liquidity.

 

The shortening of pending settlement duration from T+4 (four days from the trade date) to T+3 received perhaps the biggest applause from investors as it increases capital turnover on the market.

 

Liquidity drain sent a lot of securities companies to huge loss. 2013 was thus an active year for mergers and acquisitions (M&A), especially with securities companies.

 

The first to be mentioned was the fusion of MB Securities (MBS) and VIT Securities (VITS) to form MB Securities Company. MBS also reduced its registered capital to VND621 billion from VND1,200 billion to clear its accumulated losses. Next, Phu My Investment Co., Ltd and Southeast Asia Commercial Joint Stock Bank (Seabank) announced the transfer of the entire 84 percent of stake in SeaSecurities to six individual investors and two other organisations. Centaurus Capital Ltd and Dai Tan Viet Joint Stock Company also divested their entire stake from Nhan Viet Investment Fund Management Company.