It has been five years, but the Vietnamese stock market has only 36 companies listed on two securities trading centres. The figure is too small in comparison with thousands of joint stock companies who have qualified to be listed. According to securities experts, one solution to perfecting and developing the Vietnamese stock market is to stimulate demand.
One of the major reasons of the under-development of the Vietnamese stock market is that Vietnam has not yet improved demand. A large-sized demand stimulus with various partners will benefit the market in the short term, while eyeing long-term targets of creating a securities ‘culture’ in the shortest period of time.
With the existing features of such a fledgling market as Vietnam, the increase of the supply may be uncontrollable. If the market is developed carefully with highly profitable companies, prices of stocks will increase at a high rate year after year.
Therefore, according to experts, it is necessary to understand precisely the role of foreign investors in the Vietnamese stock market. There may be many potential investors, who will play an important role in the development of the Vietnamese stock market, but it is not easy to turn them into real investors. One of the major reasons is that the Vietnamese stock market remains very small. It is difficult to disburse large amount of investment by foreign funds. To overcome this difficulty, it is necessary to increase the volume of high quality goods in the market, making it attractive enough to major investors. A rapid increase of the supply may produce negative effects. However, an increase in the supply of high quality goods in the market will offer greater benefits. It is possible to increase money foreign investors may pour into the market by increasing the cap of the volume of stocks a foreign investor can hold. Recently, the Government has lifted the cap from 30 per cent to 49 per cent. This move has produced positive effects on the Vietnamese stock market. The success of joint stock companies in which the Mekong Fund has invested is an example of the success of joint stock companies, open to reform made by shareholders.
The Vietnamese stock market operates on a basis of periodical order matching with two sessions per day. This may make investors feel that the market is operating in a drowsy manner, so it is difficult to attract professional speculators. Therefore, it is necessary to increase the number of transaction sessions. In the short term, there will be two sessions in the afternoon. The number of sessions will be increased to three for continuous order matching. The number of transaction sessions and a permission of the trade of one stock on the same day may make the market busier. Also, the swap of stocks between stock markets will act as a demand stimulus. The listing of stocks of profitable joint stock companies in Vietnam on stock markets of foreign countries is a good way to promote the Vietnamese stock market. The swap will help attract investors as they can buy stocks in a market and sell them in another to seek price differences.
Apart from seeking professional investors to the market, it is necessary to form investment funds, which will help attract a large amount of capital from people and those who have money but do not have time to become professional investors. Over the past five years, the Vietnamese stock market has seen the establishment of two fund management companies and an investment fund. This is a vital move to create a new investment wave. However, apart from allowing major foriegn financial investment organisations to set up funds, the Government should promote the establishment of individual investment funds. This will help the market to attract more unused capital from the people via marketing activities and the results of investment funds. This will help create a family investment fund model, suitable with the customs of the Vietnamese people.
In particular, it is necessary to develop a mechanism for information announcement and to improve some securities trading skills. The launch of a professional website for the Securities Trading Centre is a highly appreciated move. Information leaked from trading centres is what concerns investors most. Therefore, trading centres have to announce information immediately as they receive it from listed companies.
A long-term strategic demand stimulus, which has been agreed by experts, is to universalise securities trading activities among people. More measures on education and dissemination of the Vietnamese stock market should be taken to help the people to understand more about the benefits from investment in the stock market.
Mai Anh
Vietnamese
