This information was heard from foreign CEOs in a discussion panel at the Bloomberg ASEAN Business Summit 2016 in December, 2016. This 3rd annual event was organized by the Ministry of Planning and Investment in collaboration with Bloomberg. The one-day meeting convened ASEAN leaders across business, finance and government in Vietnam to reflect on the progress Vietnam has made, discuss ways to overcome challenges and identify key opportunities for growth, collaboration and development.
At the meeting, CEO of Dragon Capital Dominic Scriven said Vietnam is still a frontier market, so there will be many changes and opportunities in the future. He noted that although international trade has slowed down since 2015 and the economy is expected to be rougher in 2017 because governments have failed to bring the Trans-Pacific Partnership agreement (TPP) into effect, the economic outlook of Vietnam next year is still good as Vietnam has advantages over other economies. The outlook was also positive for Vietnamese stocks, which are valued at reasonable price levels and the Government has shown its commitment to implement strong reform policies for the securities market, according to Mr.Dominic Scriven.
He added that Vietnam would attract a huge inflow of foreign capital with positive economic growth as it is among the strongest growing economies in Asia and domestic enterprises have plenty of opportunities in the future.
Dragon Capital is one of the leading investment management companies in Vietnam with more than 20 years of doing business in the country and three economic crises later.
Mr.Kevin Snowball, CEO of investment fund PXP Vietnam Asset Management, shared the same view with Mr.Dominic Scriven about the actual situation of Vietnamese stock market. Mr.Kevin Snowball said the Government has done well to help the local stock market rise better than other regional markets, although some investors still consider the local market a risky proposition. Lifting the domestic stock market from the “frontier” level to “emerging” level has been a tough task for the Government, securities-market agencies and market members, he added.
He stressed that Vietnam is still an attractive destination for foreign investors as the country’s economy is on the positive growth trend and large-cap companies such as dairy producer Vinamilk have engaged in good corporate governance. Mr.Dominic Scriven forecasted that though the benchmark VN Index has fallen 50 per cent since its peak of more than 1,170 points in March 2007, it couldincrease by 10-20 per cent in the next five years.
As a foreign investor, Mr.Kevin Snowball said he expects local companies to become more creative and improve their governance mechanisms to international standards.
In order to raise the country’s level from frontier to emerging market, Vietnam needs to improve its performance in several aspects to convince international market-watch organizations, according to Bao Viet Securities Company under Bao Viet Holdings.
These include lifting limits on foreign ownership in local companies, providing them with a level playing field, implementation of transaction settlements, development of a derivatives market and better information disclosure.
According to Chairman of the State Securities Commission Vu Bang, the increases in listings, mobilization, transactions and investment on the stock exchange had had great impacts on the overall growth of the country’s stock market.
In 2016, The VN-Index on the Ho Chi Minh City Stock Exchange experienced growth of 15 percent, the HNX-Index on the Hanoi Stock Exchange increased by 0.8 percent, with the total amount of market equalization reaching 1.76 quadrillion VND (79.67 billion USD), equal to 42 percent of total GDP in 2016.
At present, there have been 695 listed stocks and fund certificates, and 377 registered stocks with total listed value reaching 712 trillion VND (32.1 billion USD), up by 22 percent, together with 590 bonds at a total listed value of 934 trillion VND (42.1 billion USD), up by 22.5 percent. Liquidity also improved greatly, while the average level of transactions reached 6.8 trillion VND (309.6 million USD) per session, up 39 percent compared to the end of 2015.
The total capitalization value of Vietnamese stock market has increased from 32.4 percent of GDP in 2015 to 42 percent in 2016. The total market value of the investment portfolios held by foreign investors has increased by 20.7 percent by the end of 2016 compared to the end of 2015, reaching 19.55 billion USD.
