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Structural roadmap for developing Vietnam's new stock market

Structural roadmap for stock market development

Transferring all stocks to trading at the Ho Chi Minh City Stock Exchange (HOSE) in the near future is a content specified in Circular No. 57/2021/TT-BTC. Recently, the Ministry of Finance issued Circular No. 69/2023 amended and supplemented with many new points on the product management structure for the stock market in the near future.

According to new regulations, all 329 stock codes listed on the Hanoi Stock Exchange (HNX) will be transferred to the Ho Chi Minh City Stock Exchange (HOSE) no later than December 31, 2025.

From mid-2025, specifically July 1, 2025, HNX will no longer accept applications to list new shares from organizations. By December 31, 2026, at the latest, all 859 stock codes on UPCoM will be transferred to HOSE.

If all conditions are met, within the next 3 years, HOSE will transfer more shares from HNX and UPcom. HOSE will focus on stock products and fund certificates, while HNX will focus on the bond and derivatives market.

market share
Structural roadmap for stock market development, Photo: Freepik

Mr. Tsuyoshi Imai - Chairman of Japan Securities Co., Ltd. said: "Currently, if an investor wants to place an order in Vietnam, they must choose one of two exchanges, Ho Chi Minh City or Hanoi, but the mechanism is of the two exchanges are different, so it will cause confusion for investors. For example, in Japan, previously placing stock orders could be done on 1, 2, or more exchanges, but now it has been regulated. back to the Tokyo Stock Exchange. With the current payment system, this is the best way to minimize operating costs as well as optimize trading orders. This is to be done as soon as possible."

Mr. Bui Van Huy - Director of the Ho Chi Minh City branch, of DSC Securities Joint Stock Company said: "In terms of operational efficiency, such a floor is effective in both management and cost. For securities companies, instead of having to connect to two Exchanges, we only have to connect to one Exchange. For foreign investors to see, we have only one Exchange, that Exchange. has greater volume and transaction value. That is an image effect."

Ms. Ta Thanh Binh - Director of the Market Development Department, State Securities Commission informed: "The rearrangement of market areas is also in accordance with current international practices, with the main goal of maximizing and Optimize stock market operations, minimizing costs for all parties, especially market participants, and costs for investors when participating in the stock market."

Also according to the State Securities Commission, when the Exchanges focus on their specialized products, it will help improve the quality and diversify investment products. For example, at the beginning of next year, HNX will have a new derivative product - futures contracts based on the underlying asset, the VN100 index.

Many stocks are expected to bottom out in profits in 2023

With the above legal corridors, it is absolutely possible to expect that the stock market will operate more centrally, stably, and effectively in accordance with the guiding spirit of the Government and the Prime Minister.

Currently, the market P/E, or what we understand as valuation has reached 23.5 times - higher than the valuation when VN-Index was at its historical peak. However, this number is said to be a reflection of the past and is relatively short-term, and for basic investment, we will have to look at future expectations, which is looking at the profit growth of listed companies in 2024.

According to some other analyses, when profits per share of businesses are forecast to recover relatively strongly next year, market valuation will reach a very attractive area.

Stock market
HOSE will focus on stock products and fund certificates, while HNX focuses on the bond and derivatives market., Photo: Freepik

Maintaining an average performance of 13%/year compared to the VN-Index's average increase of 5% over the past 9 years, according to an investment fund, with a basic and long-term philosophy, trying to guess the VN-Index score X is not an effective method. Because the market valuation is cheap but you buy the wrong stock you will still lose, if the market valuation is high but you buy the right stock you can still win.

Mr. Pham Le Duy Nhan - Head of VCBF Investment Portfolio Management Department said: "If we look at PE, it will not reflect the current attractiveness, we should look at PB more. According to us, the current P/B statistics 1.6 times and only appeared 4 times in the past 15 years. We are long-term investors and consistently invest in high-quality fundamental businesses."

The above fund is also currently disbursing in many stock groups that are not popular with the majority due to gloomy business results such as banking and retail consumption with the expectation that these are groups that have bottomed out in profits and are preparing to move forward. into the recovery phase.

In the current record low deposit interest rate environment, output interest rates will also have a lot of room to "cool down" to support businesses and open up investment prospects in the stock market.

Mr. Le Thanh Liem, Chief Financial Officer, Vietnam Dairy Products Joint Stock Company (Vinamilk) said: "With the Government's supportive policies on lowering interest rates and reducing taxes, it also helps businesses stabilize operations and income. Consumers started to get better, and from there the company's revenue grew again."

According to estimates by Yuanta Vietnam Securities, an estimated half a million billion dong in savings is maturing in the second half of the year. It is observed that CASA (demand deposit ratio) is increasing indicating a decrease in appetite for term deposits. And when CASA cash flow increases, it means investors want to flexibly convert between savings and investment assets.

The short-term stock market is always difficult to predict because it is influenced by psychological factors. No one could have predicted that the VN-Index dropped on November 22 during the ATC session. However, when looking beyond the market prospects in the coming time, it is closely linked to Vietnam's economic growth. , flexibility of the Government, experts believe that this will probably be a very low milestone in what the stock market is aiming for.

(Theo Digital VTV)

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