Like the stock exchanges around the world, the bronze stocks of the bulls that symbolize the “bull market” are also in front of the two stock exchanges in Ho Chi Minh City and Hanoi.
However, compared to the Vietnamese stock market, few stock exchanges around the world have been able to do so in the past few years.
From 675 points in January 2016 to 2000 points in early 2018, the Vietnamese stock index completed a feat of 196% in 2 years.Since 2019, the benchmark VN index of the Vietnam Ho Chi Minh Stock Exchange has risen by 12%. According to Bloomberg, Vietnam is the third-largest stock market in the world in the past five years.
Year-to-date benchmark VN index of the Ho Chi Minh Stock Exchange (Source: Bloomberg)
Although the history of the short-lived Vietnamese stock market still has a lot of irregularities, it also allows some Chinese investors to see the huge potential contained in them.
According to the Securities Times,At present, there are more than 3,000 Chinese investors who open accounts in Vietnam, and the number of accounts opened this year is still growing rapidly. If the growth rate of account opening is relatively fast since 2019, it is expected that the total number of Chinese accounts can exceed 4,000 at the end of the first quarter.
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Vietnam will become a "new tiger" in Asia?
Statistics show that as of the end of last year, there were more than 2.1 million individual investors who opened securities accounts in Vietnam, accounting for about 2.26% of the country's total population. Among the more than 2.1 million retail investors, the proportion of foreigners opening accounts is less than 1.3%, and the sources are more diversified.
Although it is a retail-led market, institutional investors in Vietnam are also growing slowly. As of the end of last year, the number of institutional accounts in the Vietnamese securities market was 9,100. Among them, the number of accounts opened by foreign institutions was 3,242, an increase of 35 over the same period last year.
However, due to the low transaction volume and insufficient liquidity of the Vietnamese stock market, it has affected the attractiveness of foreign investors to a certain extent.
However, this situation is expected to improve, because the Vietnamese government is introducing strong measures to increase market liquidity and expand the stock market. Among them, there are two major events worthy of attention: First, with the help of capital market channels, the capital reduction and retreat of Vietnamese state-owned holding companies are progressing in an orderly manner, and more large enterprises are listed in the queue, which is regarded by the market as Good investment opportunities; Second, the Vietnam stock market trading system is brewing reforms, and plans to launch T+0 transactions at the end of this year as soon as possible, with the aim of improving stock market liquidity.
Behind the stock market boom, it is inseparable from the growth of the real economy.At present, the Vietnamese economy is growing at an annual rate of more than 8%, and foreign investment is pouring into Vietnam.“The long-term opportunities in Vietnam are huge,” said Kevin Snowball, director of PXP Vietnam Asset Management, which manages about $550 million in assets for institutional investors. Vietnam has a young, vibrant group that is eager to improve their lives. ""
Although most private banks and wealth management companies are still unable to directly trade Vietnamese stocks, there are also undiscovered opportunities – most investors have yet to notice the soaring Vietnamese stock market. But there are signs that Vietnam will soon be favored by global investors.
Such excellent performance in the Vietnamese stock market is not purely hot money. The ongoing economic reforms in Vietnam have given investors confidence in the prospects of the Vietnamese economy. The World Bank estimates that Vietnam will become one of the fastest growing economies in Asia this year.GDPThe growth rate is expected to reach 6.6%. In August 2016, the authoritative magazine "The Economist" published an article saying that Vietnam will become another Asian tiger.
Vietnamese Prime Minister Hyun Chun-fu said at the ASEAN World Economic Forum in Hanoi last year.
“In the early 1990s, Singapore’s per capita income was 125 times that of Vietnamese, and it has now shrunk to 24 times. Thailand’s per capita income was 16 times that of Vietnamese, and it has now shrunk to 2.5 times. Compared with Japan, this is A number has shrunk from 267 times to 16 times; compared with the United States, this number has shrunk from 252 times to 25 times."
In addition, according to data from the real estate consultancy Knight Frank, the average wealth of Vietnamese increased by 210% between 2007 and 2017, and currently more than 200 Vietnamese citizens have at least $30 million in investable assets. During the period 2000-2016, the number of super-rich people in Vietnam also surged by 320%, faster than India and China. If the current trend continues, by 2026, the number of millionaires in Vietnam will increase by another 170% - from 14,300 to 38,600.
Vietnam impacts MSCI
Vietnamese officials said they intend to lift restrictions on foreign ownership of state-owned and listed companies by the end of this year. This is an important measure to sprint the MSCI index.
Forbes analysis believes that if Vietnam can raise the free floating exchange rate next year and adjust the market infrastructure to better adapt to foreign investors, Vietnam is likely to be included in the emerging market index by MSCI.
The Daily Economics reporter also noted that in order to prepare for the inclusion of the MSCI Emerging Markets Index and improve liquidity, Vietnam launched the VN30 Index futures contract last year. The Ho Chi Minh Stock Exchange is currently seeking approval from the Ministry of Finance for the third in 2019. The quarterly trading of stock warrants began. In addition, the Hanoi Stock Exchange also plans to launch Vietnamese government bond futures in the third quarter of this year.
According to the World Bank, the Vietnamese stock market is booming. As early as the end of 2005, Vietnam had only 41 local listed companies with a total market capitalization of only $1 billion. As of the end of September 2018, the total number of listed companies in Vietnam reached 206, with a total market value of nearly 22 billion US dollars. At the same time, however, the soaring Vietnamese stock market in recent years has also made some stocks extremely expensive. For example, Vietnamese dairy company Vinamilk has a price-earnings ratio of 38 times.
The daily economic journalist also noted thatVietnam’s capital market is still in its infancy.Foreign institutions have held about a quarter of the shares in circulation, and most of the remaining shares are held by retail investors in Vietnam.
Yu Yuehe, general manager of Mekong Securities in Hanoi, said that it is still difficult to obtain relevant information on listed companies in Vietnam. The Vietnamese capital market is still very imperfect compared to Singapore and Malaysia. "Local securities companies like ours have only started to publish earnings this year.We still have a big gap with developed markets.”
Open a residence with a travel visa
Since the Vietnamese government has liberalized restrictions on foreigners' stock trading, it is relatively simple for foreigners to open securities accounts. Hold their passports and travel endorsements at the local securities company's sales department. Recently, some Chinese who have made business visits to the local area have also opened a job.Stock account.
So, what steps do foreign investors need to buy and sell stocks in Vietnam?
First, looking for a brokerage company in Vietnam: having a brokerage account is a necessary condition for investing in Vietnamese stocks. Since language barriers remain a major problem, foreign investors are often advised to go to some of the largest brokerage firms in Vietnam. Calculated by market share: Vietnam's top five brokerage companies are Saigon Securities, Ho Chi Minh City Securities, Vietnam Capital Securities Co., Ltd., VNDirect Securities and ACB Securities.
Second, open a Vietnamese brokerage account. Once you have chosen a brokerage company, they will ask you to fill out some documents. The specific types vary depending on the brokerage business, but generally include account opening applications, power of attorneys, application for securities trading codes, passport copies, and FATCA compliance documents (for US citizens only).
Third, open a bank account in Vietnam: stockbrokers can also help foreign investors open accounts in the banks they work with in order to hold funds and settle transactions, which requires filling out 1-3 forms.
Fourth, after applying for the securities trading code, after completing all other work, the brokerage company will apply for the securities trading code of the foreign investor, which is also a requirement for trading stocks in Vietnam.
Finally, it needs to be reminded that if you go to the bank to exchange foreign exchange, you must fill out a "Application for Purchase of Foreign Exchange", which clearly states: when a domestic individual handles the purchase of foreign exchange business, it must not be used to buy a house abroad.Stock investment, purchase life insurance and investment returnsDividendCapital projects such as insurance that are not yet open.That is, the foreign exchange purchased is not allowed to be used for overseas stock trading. Please pay attention to this.
(Article source: Daily Economic News)