SK Group and Vingroup leaders at the signing of deal in May 2019 to allow the former to purchase 6.15 per cent in the latter for 1 billion USD. (Photo courtesy of Vingroup)

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 takeeffect from 2021.

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

In addition, the law paves the way for theestablishment of the Vietnam Stock Exchange and the Vietnam SecuritiesDepository and Settlement Corporation, in which the State holds more than 50 percentof 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 toreach 100 percent of Vietnam’s total gross domestic product (GDP) in 2020 and120 percent in 2025. Meanwhile, the value of the bond market is expected toreach 47 percent of total GDP in 2020 and 55 percent in 2025.

3. Booming bond market

The corporate bond market flourished in 2019 with atotal of 237 trillion VND worth of bonds issued in January-November period, up 6percent on-year, with 30 percent of the total coming from real estatecompanies. The value of the corporate bond market is now equal to 10.26 percentof the country’s total GDP. Property developers have the highest bond yieldrates of 15 percent per annum, which has worried investors about potentialrisks.

4. Rise of domestic exchange-traded funds

The stock market has seen strong development in localexchange-traded funds E1VFMVN30, which raised nearly 2.2 trillion VND frominvestors in 2019. Foreign investors bought a net value of 2.4 trillion VND inE1VFMVN30 fund certificates, making it the second largest ETF in terms of valuebehind the US fund VanEck Vectors Vietnam.

5. Influx of foreign capital

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

6. FTM fraud

Shares of the HoSE-listed firm Duc Quan Investment andDevelopment JSC (FTM) lost nearly 91 percent in four and a half months sinceAugust 13 to end December 26 at 2,190 VND per share. The sharp decline raisedconcerns among investors about its directors who had taken advantage tomanipulate the share price.

A dozen securities firms had accepted FTM shares asmortgages from investors for margin lending, and they had to force-sell thestock to cut losses.

7. Fine for real estate firm for not registering

On November 19, the State Securities Commission issueda 400 million VND fine to real estate company FLCHomes for having not registeredits public share issuance with the market regulator, and the company was askedto revoke all eligible shares and refund all investors.

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

8. Covered warrant market debuts after seven-yearpreparation

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

By December, average trading volume of coveredwarrants reached 2.81 million contracts each day, worth 7.44 billion VND.

9. Lower-than-expected liquidity in 2019

Stock market liquidity had been widely expected toincrease sharply in 2019 thanks to the influx of foreign capital. However,trading liquidity fell 29 percent year-on-year to 4.64 trillion VND in each sessionthough the benchmark VN-Index had gained 6.8 percent year-to-date by December19.

10. Floor brokerage fee removed

Circular 128 dated December 27, 2018 sets the maximumrate of brokerage fee at 0.5 percent of the value of a transaction but mentionsnothing 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 percent of thebrokerage market share./.VNA