Understanding Stock Capitalization in Vietnam: Trends and Insights

Vietnam's stock market has emerged as a significant player on the global financial stage. With a market capitalization estimated at VND5,416 trillion ($230.4 billion) at the end of April 2023, it now accounts for 60.89% of the country's 2022 GDP, as reported by the State Securities Commission (SSC). In this article, we'll delve into the intricacies of Vietnam's stock market, exploring its growth, challenges, and future prospects. So, what doess dissolving a limited company mean? ACC Group will address your question.

I. What is the capitalization of the stock market in Vietnam?

As of my last knowledge update in January 2022, the total market capitalization of the stock market in Vietnam was estimated to be around $300-350 billion USD. However, stock market capitalization can fluctuate significantly based on market conditions, economic factors, and investor sentiment. To get the most current and accurate figure for the capitalization of the stock market in Vietnam, I recommend checking with a reliable financial news source, a stock market index provider, or a local stock exchange for the latest data, as the numbers may have changed since my last update.

II. Vietnam's Stock Market: An In-Depth Analysis

The Three Bourses

Vietnam boasts three stock exchanges: the Ho Chi Minh Stock Exchange (HoSE), the Hanoi Stock Exchange (HNX), and the unlisted public company market UPCoM. These exchanges have become pivotal channels for medium and long-term capital mobilization in the country.

Capital Mobilization

In 2021, enterprises successfully raised VND731,349 billion ($31.14 billion) through the issuance of shares and corporate bonds. This included nearly VND95,698 billion ($4.07 billion) in shares, VND29,766 billion in corporate bonds via public offerings, and VND605,934 billion in corporate bonds through private placements. In 2022, the capital raised through these mechanisms reached an estimated VND116,684 billion ($4.97 billion).

Market Composition

Vietnam's stock market is a diverse landscape, comprising 758 stocks and fund certificates listed on the two major stock exchanges. Additionally, 857 stocks are registered on UPCoM, collectively valued at VND1,992 trillion ($84.8 billion), which equates to 20.9% of the estimated GDP for the previous year.

The Bond Market

The bond market also plays a significant role, with 449 listed bond codes having a total value of over VND1,834 trillion ($78.1 billion), representing 19.3% of the estimated 2022 GDP.

Investor Influx

The increasing number of investors has contributed to the burgeoning market liquidity. By the end of April 2023, there were over 7 million investor accounts in Vietnam, surpassing the target set for 2025 by 5%. These accounts comprise both domestic (over 7 million) and foreign (43,465) investors, reflecting a substantial growth of 156% and 24%, respectively, compared to the end of 2020.

Challenges Faced

Despite its remarkable progress, Vietnam's stock market is not without its challenges. Firstly, the market remains dominated by individual investors, causing instability in transactions. Many of these investors lack comprehensive knowledge of legal conditions and often engage in speculative trading based on hearsay.

Supervision and inspection activities also encounter difficulties due to increasingly sophisticated legal violations and limited resources. Furthermore, the market lacks diversity, primarily listing or registering stocks, with only a few derivative securities packages.

The market's developmental stage makes it susceptible to psychological factors. False rumors, concerns about cash flow, inflationary pressure, and global economic uncertainties have led to fluctuations in the domestic market.

Expectations for the Future

The SSC anticipates that the Vietnamese economy and its stock market will continue to face challenges in 2023. To ensure the smooth operation of the stock market and protect investors' interests, the commission plans to review the Securities Law and related documents, strengthening regulations and sanctions against violations.

In terms of market organization, a new stock trading system developed by the Korea Exchange (KRX) will be introduced to facilitate the launch of new products and services and ensure the market's smooth operation.

The SSC will also focus on improving transparency in the secondary market for privately placed corporate bonds and expedite the restructuring of the stock market. Enhanced supervision of securities companies will be implemented to detect violations promptly, while monitoring domestic and international stock markets closely and providing early warnings to investors regarding risks.

To foster the transparent and sustainable development of the stock market, the commission will supply complete, accurate, and timely information to investors, reducing the influence of rumors and fake news. Collaboration with international organizations is also on the horizon to upgrade the Vietnamese stock market and attract more foreign investors.

III. Conclusion

Vietnam's stock market has made impressive strides, but challenges remain. With the proactive measures undertaken by the SSC and the growing interest from investors, the market is poised for continued growth and development.