Investors' sentiment weigh on stock market performance: Finance minister

Investors' sentiment continues to weigh heavily on the performance of Vietnam’s stock market, which is still in the early stage of development.

An investor at a securities company in Hanoi. Photo: Pham Hung

Minister of Finance Ho Duc Phoc has assessed in a report submitted to the National Assembly.

According to Phoc, in the past months, many stocks' prices have been rising without any positive information on the business performance of the public firms, referring to cases of FLC or Louis Holdings with their respective executives having been arrested for market manipulation.

“False rumor, concern over the capital flow, and high inflationary pressure have led to recent market’s downtrend,” Phoc said.

Last week, the benchmark Vn-Index declined by 14% against late 2021, which resulted in a decrease of 13% in market capitalization.

Concern over the issue of market manipulation has also been echoed by the National Assembly’s Economic Committee, which calls for the Government to take steps to stabilize and ensure the transparency of the stock market.

Such issues, however, have not prevented the rise of the stock market. In 2021, the liquidity rose by 258% against the average of 2020, while the number of new securities accounts was around the cumulative figure in the past 10 years.

As of present, Vietnam has over 5.2 million securities accounts, up 21% against 2021.

The ministry's report also mentioned rising irregularities in the corporate bond market amid its fast development pace, with an example being the arrest of the Chairman of Tan Hoang Minh Group for an appropriation of assets by deceit.

For the past five years, Vietnam’s capital market expanded by 28.5% per year, with the rate going up to 33.2% in 2021.

Total capital mobilized in the market reached over VND1,120 trillion (US$48.29 billion), or 38.7% of total social investment.

As of the end of the first quarter, the market size reached 134.5% of the GDP, of which the stock market made up 94%, the Government bond market  23%, and the corporate bond market 16.4%.

To promote the healthy development of the stock and bond markets, Minister Phoc noted the ministry would revise the regulation on corporate bond issuance in the domestic and foreign markets, with the aim of tightening conditions for bond issuance and strengthening the role of the State Securities Commission of Vietnam (SSC) in supervising the market operation.

Phoc expected the soon formation of a specialized platform for public firms to conduct private placement, for which all bonds are subject to registration with the Vietnam Securities Depository and the stock exchange authority.

“The ultimate goal is to enhance the transparency of the market from the phase of bond issuance to the transaction,” he added.