Stock market in Viet Nam

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Stock market in Viet Nam

  1. 1. <ul><li>Group 5: </li></ul><ul><li>Nguyen Thi Thu Ha </li></ul><ul><li>Tran Thi Thu Ha </li></ul><ul><li>Pham Trung Kien </li></ul><ul><li>Kieu Hai Yen </li></ul><ul><li>Nguyen Van Ha </li></ul><ul><li>Mai Thanh Binh </li></ul>Stock market in Viet Nam
  2. 2. Agenda 1. Overview 2 . Key features 3. Major risks 4. Solutions
  3. 3. Overview of VN stock market <ul><li>Starting point : </li></ul><ul><li>First round took place on 28 june 2000 </li></ul><ul><li>2 companies listed : REE and SACOM </li></ul>
  4. 8. <ul><li>􀁺 Foreign invested funds: </li></ul><ul><li>- Public funds </li></ul><ul><li>- Member funds </li></ul><ul><li>- Venture capital funds </li></ul><ul><li>Hedge funds </li></ul><ul><li>􀁺 Foreign investors: </li></ul><ul><li>- Invest via commercial presence </li></ul><ul><li>- Trust </li></ul>
  5. 9. Figures as of 11 may 2007 <ul><li>Stock : 107 companies     </li></ul><ul><li>Share Capital : 1.776,86 billions VND      </li></ul><ul><li>Market Capital : 230.085,64 billions  VND   </li></ul><ul><li>Bond : 367 </li></ul><ul><li>Value by par : 57.335 billions VND </li></ul><ul><li>Fund unit : 02 </li></ul><ul><li>Fund unit capital : 1.000 billions VND </li></ul><ul><li>Market Capital : 2.370 billions VND </li></ul><ul><li>VN index (11 may 2007) : 1039.63 points </li></ul><ul><li>Share capital equal to about 38% GDP </li></ul><ul><li>OTC market is considered 3 times bigger than the stock exchange </li></ul>
  6. 10. Vietnam’s P/E index ( Price on Equity) <ul><li>20 biggest companies’ average P/E: 73,3% </li></ul><ul><li> The highest average P/E in the world. </li></ul><ul><li>+ The 2 nd India’s P/E index: only 20,4% </li></ul><ul><li>+ The average P/E in the world: 16,2% </li></ul><ul><li> Abnormally high compared to market standard </li></ul><ul><li> Vietnam P/E index in risk </li></ul>Features
  7. 11. Foreign indirect investment capital in Vietnamese stock market <ul><li>Indirect investment capital from foreign investors in Vietnam: </li></ul><ul><li>Actually reached $ 2 billions </li></ul><ul><li>Expected $1.5 billions in the next 6 months </li></ul>Source: State Bank of Vietnam (SBV) in 2007 <ul><li>Large companies like City Group, HSBC, JP Morgan, Deutsche AG...are also investors in the Vietnam stock market </li></ul><ul><li>70 % of indirect investment capital comes from investment funds </li></ul>
  8. 12. Structure of indirect foreign investment in Vietnam stock market Source: State Bank of Vietnam (2007)
  9. 13. Risks <ul><li>Difficult to generate added value </li></ul><ul><li>Explains 85% of underperformance </li></ul><ul><li>Better source of added value </li></ul>Micro risk Macro risk Risk linked to each company=specific risk
  10. 14. Stock market facing many risks Commercial banks: The loans that investor borrow from Commercial banks are’nt controlled  the liquidity capacities are threatened External finance The capital inflow stops suddenly or the capital outflows from the market  Difficult to maintain the current balance deficit - Big deficit when the imports increase, after integrating in WTO - Large capital inflows may cause difficulties to the implementation of the monetary and foreign exchange policies.
  11. 15. Problems must be faced regarding foreign indirect investment capital <ul><ul><li>1. The foreign investor can withdraw all indirect investment capital in Vietnam stock market at the same time? </li></ul></ul><ul><li> Influence on : bill of exchange reserves </li></ul><ul><li>Risk for importer and capacity of debt payment </li></ul><ul><li>2. “Bubble” crisis in real estate market? </li></ul><ul><li>Reasons: majority of foreign indirect investment is used for real estate market, only minority is served to production and market expansion. </li></ul><ul><li>Risk: regression of economy lasting long and difficult to rehabilitate </li></ul>
  12. 16. Solutions <ul><li>Further reforms of market institution (Legal and policy </li></ul><ul><li>framework, regulation, and operation of the market) </li></ul><ul><li>Completion of legal framework: legal documents under </li></ul><ul><li>Securities Law, Enterprise Law and legal document on SOE </li></ul><ul><li>Equalization, electronic trading, and securities clearing and Settlement </li></ul>
  13. 17. Solutions (cont) <ul><li>Policies of SOE Equalization, Reduction of State Ownership at enterprises </li></ul><ul><li>New single financial market supervisory body </li></ul><ul><li>Development of professional organizations </li></ul><ul><li>Risk-based regulation of securities market </li></ul><ul><li>Cooperation in regulation over monetary market and securities market </li></ul>
  14. 18. Thank you

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