VIETNAM SECURITIES MARKET HIGHLIGHTS

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Dennis Lyons
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1 VIETNAM SECURITIES MARKET HIGHLIGHTS Presented by Nguyen Quang Long Deputy Director Fund Management Department 1 * The views expressed are those of Author and do not reflect the views of the SSC.

2 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 2

3 Viet Nam Social- Economic Overview 3

4 Population(2014): 90 million Life expectancy (2014): 75 Median age: 30 GDP per capita (nominal): $2200 4

5 Basic Economics Indicators 5

6 6

7 Institutional framework for securities supervision

8 Institutional framework for financial supervision and stability Government Ministry of Finance State Bank of Vietnam National Financial Supervisory Commission State Securities Commission of Vietnam Insurance Supervisory Agency Banking Supervisory Agency Various Departments Deposit Insurance of Vietnam Securities business Insurance companies Banking and Finance Credit Institutions 8

9 The SSC s organization chart SSC 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 Supporting and Coordination Departments The SSC s Office Rep. Office in HCM Legal Department International Cooperation Dept Accounting and Procurement Department Entities under SSC s supervision Hochiminh Stock Exchange Hanoi Stock Exchange Vietnam Securities Depository Inspection Department Human Resource Department 9 Market Surveillance Department

10 The functions of departments Except Securities Market Development Department, all other functional departments in charge of both supervision (offsite 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 10

11 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 11

12 The current state of Vietnam s securities market

13 VNIndex 13 Source: HSX

14 Market Cap/GDP 14 Source: SSC

15 Number of Financial Institutions Securities Firms Fund managers (active) * 81* 79* * 43* 46 Source: SSC * The number of securities firms and fund managers are declining due to M&A, suspending operations, and withdrawing licenses. 15

16 Trading Accounts Years Domestic investors Foreign investors Total Individuals Institutions Individuals Institutions , , , , , , , , ,463 2,003 11, , ,558 2,662 12, , ,038,730 3,468 13, ,056, ,213,478 4,814 13,613 1,339 1,233, ,338,302 5,487 14,361 2,043 1,360, ,685,597 7,439 16,850 2,503 1,712,389 16

17 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 Total AUM ~$40 million ~$7 Billion (mostly from Insurance Company) 17

18 1. Equity side: - Quality of listed Companies (Reports, public information annoucement, ) - Quantity of investable listed companies (small in size, low freefloat, 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 18

19 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 19

20 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) 20

Introductory Presentation. Chapter 1- Overview of securities market in Vietnam

Introductory Presentation. Chapter 1- Overview of securities market in Vietnam Introductory Presentation Chapter 1- Overview of securities market in Vietnam Vietnam at a glance - Total Area: 331,230.8 km 2 - Population: 92,695,100 (2016 estimate) - Density: 280 ppl/km 2 Source: General