The steady rise of the securities market index would spur more investors to choose securities for their investment, financial experts said last week. Dominic Scriven, director of UK-backed Dragon Capital, said many investors “ had seen the positive moves made by the government and the state Securities Commission (SSC) and they are looking for securities to make their investment in.”
Scriven said the price of securities, mainly stakes in listed companies and government bonds, were not high and did not reflect the true potential of listed securities. Tran Thanh Tan, general director of VietFund Management (VFM), said: “Based on current economic data, investors, especially foreign investors, should put money in securities rather than other kinds of investment.”
Tan estimated that the annual average growth rate was at 7.2 to 7.4% and the ratio of profit to turnover of most listed companies was 19.7%. Tan said other investment sectors, such as bank deposits, insurance, real estate and gold, were unstable. VFM is also the management arm of VF1, the country’s first joint-venture investment fund.
Tan said there were four individual investors who had contributed 20 billion dong (US$1.3 million) each, while many corporate investors had contributed between 10 billion dong (US$657,000) and 20 billion dong (US$1.3 million). Nguyen Quang Vinh, director of the Bao Viet Securities Co, said that while stock prices could fluctuate, government bonds were relatively attractive. It is estimated that the annual interest rate on government bonds reached between 8–9%. Meanwhile, the average inflation rate was 4–5% per annum.
However, Vinh said: “The biggest problem for the securities market is that the scale of the market remains relatively small. There are just 24 listed companies, while the largest companies have chartered capital of not more than US$20 million.” Scriven said: “The country should exploit fully the potential of equitised companies but not listed companies.”
More than 1,000 state-owned companies have been equitised and around 2,000 more will be equitised this year be equitised this year and next. Tran Thanh Ha, deputy president of the Vietnam Securities Commission, said the scale of the market would greatly increase by the end of this year as large-scale equitised enterprises joined it.
To boost the market and stimulate small- and medium-sized enterprises (SMEs) to list on bourse, Hanoi Securities Trading Centre is to open by the end of this year to create a level playing ground for SMEs.
The state Securities Commission (SSC) has calculated that so far 24 equitised enterprises have listed on the bourse with the total face value of listed shares estimated to be 1.184 trillion dong (US$77 million). The 121 kinds of government bonds have a total value of more than 10 trillion dong (US$660 million). A recent SSC report showed that the investment rate in securities was small, with the total value of shares and bonds listed on the bourse just 3.58% of GDP.