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Stock market capitalization to make up 30 per cent of GDP

Viet Nam’s stock market capitalisation is expected to make up 30 per cent of the country’s gross domestic product (GDP), according to the Chairman of the State Securities Commission (SSC) Vu Bang.

Bang said yesterday in a conference in Ha Noi that the market would continue to grow strongly in the next four years with the transaction value of listed shares to account for between US$30 billion and $40 billion by 2010, 2-3 folds higher than the current level.

Net capital of securities companies would increase dramatically, averaging VND500 billion ($31 million) per company, and the number of investors would rise three to four times the current figure of between 250,000 and 300,000.

Bang also pointed out certain shortcomings in the country’s stock market such as shortage of legal sanctions, poor technological infrastructure and an undermanaged informal stock market.

To overcome these shortcomings and meet the targets, the ministry and related agencies need to work out more measures, experts said at the conference.

Tran Bac Ha, General Director of the Bank for Investment and Development of Viet Nam, asked the Ministry of Finance to issue directives to guide the implementation and enforcement of the Securities Law.

With the number of securities companies increasing at a fast pace, professional training courses of international standards should be held to improve professional and managerial skills of leaders and staff in these companies, said Nguyen Duy Hung, Chief Executive Officer of the Sai Gon Securities Inc.

Relevant bodies should also create favourable conditions for domestic financial institutions and create a "spine" for the country’s finance sector, Hung added.

Do Van Trac, General Director of the Sai Gon Cable Telecommunication and Material Company, expressed his hope of establishing an association for listed companies to help them develop further, and make the mobilisation of capital easier for economic development.

Most of the experts asked the government to implement management tools to remove oversight in operations of securities companies and improve transparency to protect the legal interests of investors.

It was necessary to build a legal framework for listed firms to mobilise capital from foreign stock markets, they said.

By the end of 2006, there were 193 listed shares in HCM City and Ha Noi bourses (the figure was 41 at the end of 2005) with a total market capitalisation of VND221 trillion (US$14 billion).

In addition, nearly 400 government, urban and corporate bonds with a total face value of VND70 trillion ($3.58 billion), and two fund certificates of VF1 and PRUBF1 with a combined face value of VND1 trillion ($62.5 million) have also been listed on the bourse.

New role for commission

The State Securities Commission (SSC) has officially announced handing over its authority to approve securities listing applications to the HCM City and Ha Noi securities trading centers.

The transfer of power was conducted in accordance with the Securities Law with effect from January 1.

The two securities trading centers will receive and approve applications for listing on the bourse directly from institutions and enterprises as stipulated by the new law. This will help to ease the volume of the daily work done by the SSC. From now on, SSC will only have one function: ensuring state management of the stock market.

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