vietnams ecuritiesm arketh ighlights...vietnams ecuritiesm arketh ighlights presented by nguyen...
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VIETNAMSECURITIESMARKETHIGHLIGHTS
Presented byNguyen Quang Long – Deputy Director
Fund Management Department1
* The views expressed are those of Author and do not reflect the views of the SSC.
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Chapter 1: Regulatory challenge in Vietnam
• Social-Economic overview, Institutional framework for securities supervision and Policy Making Hierachy
• The current state of Vietnam’s securities market
• Challenges and hot issues
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VietNamSocial- EconomicOverview
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Population(2014): 90 millionLife expectancy (2014): 75Median age: 30GDP per capita (nominal): $2200
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BasicEconomicsIndicators
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Institutionalframeworkforsecuritiessupervision
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Institutional framework for financial supervision and stability
Government
Ministry of Finance
State Securities
Commission of Vietnam
Insurance Supervisory
Agency
State Bank of Vietnam
Banking Supervisory
Agency
Various Departments
Deposit Insurance of
Vietnam
National Financial Supervisory Commission
8Securities business
Insurance companies
Banking and Finance Credit
Institutions
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The SSC’s organization chart
Separate Units
Securities Research and
Training
Department of IT
Vietnam Securities
Review
Functional Departments
Securities Market Development Department
Securities Business Supervision Dept
Fund Management Supervision Dept
Public Companies Supervision Dept.
Securities Issuance Supervision
Inspection Department
Market Surveillance Department
Supporting and Coordination Departments
The SSC’s Office• Rep. Office in
HCM
Legal Department
International Co-operation Dept
Accounting and Procurement Department
Human Resource Department
Entities under SSC’s supervision
HochiminhStock
Exchange
Hanoi Stock Exchange
Vietnam Securities
Depository
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SSC
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The functions of departments• Except Securities Market Development Department, all other
functional departments in charge of both supervision (off-site monitoring) and examination (on-site monitoring) in respect of their functions
• If the findings from on-site monitoring are serious and violating the laws, the functional departments would send suspicious cases to the Inspection Department to take suitable measures • Administrative money penalty if evidence is clear• Or further inspection
• All departments are in charge of making policy relevant to their functions
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Policies Making Hierachy• Laws: made by the National Assembly: e.g. Securities Law,
Enterprise Law, Depository Institutions Law• Government Decrees: Issued by Government to implement
the laws• Prime Minister Decisions: Sometimes to be issued to
implement specific provisions of Government Decrees • Ministerial Circulars: to implement Government Decrees• SSC’s Decisions: to guide securities businesses
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ThecurrentstateofVietnam’ssecuritiesmarket
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VNIndex
13
Source: HSX
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Market Cap/GDP
14
Source: SSC
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Number of Financial Institutions
2009 2010 2011 2012 2013 2014 2015 2016
Securities Firms
105 105 105 105 104 85* 81* 79*
Fund managers(active)
46 47 47 46 46 43* 43* 46
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Source: SSC
* The number of securities firms and fund managers are declining due to M&A, suspending operations, and withdrawing licenses.
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Trading AccountsYears Domestic investors Foreign investors Total
Individuals Institutions Individuals Institutions
2000 2,908
2002 13,607
2004 21,600
2005 29,065
2006 110,652
2007 303,190 800 7,949 200 312,139
2008 517,463 2,003 11,465 497 531,428
2009 807,558 2,662 12,067 627 822,914
2010 1,038,730 3,468 13,035 794 1,056,027
2012 1,213,478 4,814 13,613 1,339 1,233,244
2014 1,338,302 5,487 14,361 2,043 1,360,193
2016 1,685,597 7,439 16,850 2,503 1,712,38916
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End of 2016
Listed Companies 695
OTC - registered 377
Average trading value $30 mil/ trading day
No of Funds Managed 30
- Open-ended 18
- Close-ended 1
- ETF 2
- REITs 1
- Member fund 8
Total NAV ~$40 million
Total AUM ~$7 Billion (mostly from Insurance Company) 17
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1. Equity side:- Quality of listed Companies (Reports, public information annoucement,…)- Quantity of investable listed companies (small in size, low free-float, few big companies)- Lack of understanding about CG (Vietnam SSC is proposing a Decree about CG)
2. Bond market:- Lack of CRA- Tiny corporate bond market (Mostly dominated by government bond)- Not very liquid
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• 3. Fund Management Industry: • Internal challenges:
• Lack of awareness from investor due to limited resource;• Lack of high skill staffs (due to new industry)• Lack of surveillance bank (trustee) due to costs of operation• Limited distribution channels
• External challenges:• High Bank deposit interest rates (~7% in 2017)• Competition form Banks, Insurance companies and Stock-brokers
(conflict of interests and targets)• Alternative investment channels• Culture habit
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• 4. Power of the SSC and the effective co-operation between organizations:• Lack of Investigative power• Lack of effective information sharing between SSC and other
organizations (improving)• 5. Absent of supporting elements
• No derivatives market (launching soon)• No USD hedging (for foreign investors)• Slow privatization progress (due to number of reasons)
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