Top 10 landmarks on the stock market in 2019

Monday, 2019-12-30 11:02:23
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Chairman of the State Securities Commission, Tran Van Dung, speaks at a recent ceremony to announce the top 10 events on the Vietnamese stock market in 2019.
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NDO/VNA - The following are the top 10 events on the Vietnamese stock market in 2019 as selected by the Securities Journalists Club.

1. New Law on Securities approved

The 14th National Assembly on November 26 approved the amended Law on Securities during its eighth meeting. The new law will take effect from 2021.

The new law aims to improve the quality of companies trading shares on the stock market and better protect investors.

In addition, the law paves the way for the establishment of the Vietnam Stock Exchange and the Vietnam Securities Depository and Settlement Corporation, in which the State holds more than 50 percent of charter capital or total voting shares.

2. Overhaul plan for stock market passed

The Prime Minister on February 28 issued Decision 242 on restructuring the securities and insurance sectors until 2025.

The Government wants the value of the stock market to reach 100 percent of Vietnam’s total gross domestic product (GDP) in 2020 and 120% in 2025. Meanwhile, the value of the bond market is expected to reach 47% of total GDP in 2020 and 55% in 2025.

3. Booming bond market

The corporate bond market flourished in 2019 with a total of VND237 trillion worth of bonds issued in January-November period, up 6% on-year, with 30% of the total coming from real estate companies. The value of the corporate bond market is now equal to 10.26% of the country’s total GDP. Property developers have the highest bond yield rates of 15% per annum, which has worried investors about potential risks.

4. Rise of domestic exchange-traded funds

The stock market has seen strong development in local exchange-traded funds E1VFMVN30, which raised nearly VND2.2 trillion from investors in 2019. Foreign investors bought a net value of VND2.4 trillion in E1VFMVN30 fund certificates, making it the second largest ETF in terms of value behind the US fund VanEck Vectors Vietnam.

5. Influx of foreign capital

Foreign investors rocked the market by buying into local large-cap firms. Firms of the Republic of Korea took the spotlight as SK Group purchased 6.15% in Vingroup capital for US$1 billion, and KEB Hana Bank bought a 15% stake in the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) for US$882 million. Other big deals include the US$173 million buy-in of Japanese insurer Sumitomo Life for Bao Viet Group.

6. FTM fraud

Shares of the HoSE-listed firm Duc Quan Investment and Development JSC (FTM) lost nearly 91% in four and a half months since August 13 to end December 26 at VND2,190 per share. The sharp decline raised concerns among investors about its directors who had taken advantage to manipulate the share price.

A dozen securities firms had accepted FTM shares as mortgages from investors for margin lending, and they had to force-sell the stock to cut losses.

7. Fine for real estate firm for not registering

On November 19, the State Securities Commission issued a VND400 million fine to real estate company FLCHomes for having not registered its public share issuance with the market regulator, and the company was asked to revoke all eligible shares and refund all investors.

FLCHomes had an instant reply, claiming it had completed all requests from the SSC and the company declared no investors had asked for the refund.

8. Covered warrant market debuts after seven-year preparation

On June 28, the Ho Chi Minh Stock Exchange launched a new product called covered warrants. This was the second derivative product on the Vietnamese stock market after the VN30 futures.

By December, average trading volume of covered warrants reached 2.81 million contracts each day, worth VND7.44 billion.

9. Lower-than-expected liquidity in 2019

Stock market liquidity had been widely expected to increase sharply in 2019 thanks to the influx of foreign capital. However, trading liquidity fell 29% year-on-year to VND4.64 trillion in each session though the benchmark VN-Index had gained 6.8% year-to-date by December 19.

10. Floor brokerage fee removed

Circular 128 dated December 27, 2018 sets the maximum rate of brokerage fee at 0.5% of the value of a transaction but mentions nothing about the lowest rate. After the circular took effect on February 15, 2019, many securities firms zeroed their brokerage fees to attract investors. There are now 70 securities firms and the top 10 hold 65-70% of the brokerage market share.