WFE Interviews Tran Dac Sinh, Chairman, HOSE
FOCUS: Could you give us a bit of background about your exchange?
On 07/11/1998, Prime Minister signed Decision No. 127/1998/QĐ-TTg to establish Hochiminh City Securities Trading Center.
On 28/07/2000, the first trading session of Hochiminh City Securities Trading Center was launched with 2 listed stocks.
On 11/05/2007, in order to meet the rapid growth of the market, the economic innovation and the business restructure, Prime Minister signed Decision No. 599/QĐ-TTg to transform Hochiminh City Securities Trading Center into Hochiminh Stock Exchange (HOSE) organized according to the model of a one-member limited liability company (100% equity owned by Ministry of Finance).
HOSE is the leading stock market in Vietnam, currently accounting for 85% of total market capitalization. HOSE has attracted the most large-scale companies that represent the national economy. The products traded on HOSE include stocks, municipal bonds, corporate bonds and fund certificates. As of September 2013, there were 301 companies listed on HOSE, with a total market capitalization of almost USD 40 billion, an increase of 480% compared to year 2000. Besides, there were also 3 types of fund certificates and 39 bonds listed on HOSE. The respectively listed volumes were 26.4 billion shares, 126 million fund certificates and 72 million bonds. The average trading volume per day during quarter III/2013 was 49 million shares, equivalent to 45 million USD per day. The average turnover ratio was 42.05% during the first half of year 2013.
FOCUS: How active are foreign investors in your exchange ? How accessible is your market ?
- At present, there are 94 securities companies as members of HOSE, providing services for over 1.3 million trading accounts in which:
• Domestic individual investors: 1,282,071 accounts
• Domestic institutional investors: 5,081 accounts
• Foreign individual investors: 13,950 accounts
• Foreign institutional investors: 1,631 accounts
In year 2012, the trading volume of foreign investors reached 2.38 billion shares, accounting for 8.46 % of total market trading volume, equivalent to 2.9 billion USD and 14.1 % of the whole market’s trading value.
- Market accessibility of foreign investors:
Procedures for registration of trading: a foreign investor, either institution or individual, has to apply for securities trading code and open depository account at Vietnam Securities Depository Center (VSD). Next, with a trading account opened at a broker member of HOSE, the foreign investor can trade securities listed on HOSE.
As trading, foreign investors can come to the counter at securities companies, or use telephone, online transaction via the internet, SMS, or make transactions through intermediaries (custodian banks)
However, there is a limitation on foreign investors’ ownership holding according to the Securities Law of Vietnam:
• For listed stocks/ fund certificates: maximum 49 % (maximum 30 % for banking sector)
• Bonds: unlimited.
The proportion of the market capitalization of listed companies by industries :
• Finance, banking, insurance: 33.12 %
• Real estate: 11.00 %
• Industrial processing and manufacturing: 29.48 %
• Construction: 1.93 %
• Others: 24.47 %
FOCUS: What new project/product are you currently working on ?
HOSE is projecting new products to enhance liquidity of secondary market. Beside VN Index and VN30 Index, HOSE will launch four new indices for the medium and small market segment, including VN Midcap, VN SmallCap, VN 100, VN AllShare in the early of 2014. Moreover, we will also deploy ETFs and Coverred Warrant next year to serve the increasingly diverse needs of investors.
The major projects being implemented at HOSE:
- Office building, scheduled for completion in the first quarter of 2014.
- Backup data center, expected for completion in the third quarter of 2014.
- Information Technology Services Agreement with KRX, scheduled for completion in the first quarter of 2015 to provide a modern IT infrastructure for the whole securities markets in Vietnam (for HOSE, HNX and VSD).
FOCUS: What are the challenges you see in your market today and in the future?
- The unstableness of the macro-economic situation affects the operation of listed companies.
- The market is still at small size, the liquidity is not high.
- The capacity of market participants is uneven and mixed up.
- Products have not been diverse yet.
- The number of institutional investors is still small.
Question 5: How do you assess your exchange`s position at a time of increased globalization?
Becoming WFE member is an honor and great opportunity for Hochiminh Stock Exchange in particular and for Vietnam securities market in general. Despite being an attractive destination to international investors, Vietnam stock market is still in the group of frontier markets as ranked by index calculators such as FTSE, MSCI..., due to market scale and conditions. This vastly affects the allocation of investment flows from foreign funds. Besides, a number of stock markets in the region also get WFE membership criteria as a basis for market evaluation when considering cross-border investment rules. Therefore, being WFE member is not only an empowering of Hochiminh Stock Exchange, but also a raise of value of listed companies in attracting more foreign investment. The membership will bring Hochiminh Stock Exchange a key to access the international standards, to exchange and to acquire experience of developed markets so that Hochiminh Stock Exchange actively plays more role in the country's economic development and affirms its leading and dynamic position in the stock market of Vietnam.