Things you need to know about Vietnam’s stock market

The year 2017 has marked strong economic growth in Vietnam’s market, with GDP (Gross Domestic Product) went up about 6-7% and it keeps going up. As a result, Vietnam recently has become Asia’s fastest growing stock market with 100% growth in 5 years.

THINGS YOU NEED TO KNOW ABOUT VIETNAM’S STOCK MARKET

Here in Vietnam, the stock market is different things from the others. As you know, the stock market in process of transforming from a frontier to an emerging market like Vietnam’s has some special features. So that, those are things you need to know before participating in the Vietnam stock market:

  1. Insider trading:

    Insider trading causes unfairness between investors. So agency regulators and professional organizations always try to establish laws and ethics with the aim of reducing insider trading problem.
    Like any other market at the same level, Vietnam’s stock market is facing this problem too. Although the Securities Commission is doing its best to inspect frequently and increase penalties, still some cases were missed. To protect yourself from being a victim, we advise investors to get away from listed companies:
    -Regularly announcing information late
    -The company’s leader and other related people who usually register to buy or sell shares.
    -Leadership and other related people who have been punished even one time.
    -The company is aware of its stock market through regular action: buying and selling treasury shares,           announcing information to support the share market, changing from a large audit firm to a small one…

  2. Lack the data

    It’s not easy to find statistical data on new industries due to the lack of professional organizations working on it. Even in traditional industries, there are not many surveys to get raw figures. Sometimes the accuracy of data is suspicious to analysts.
    General Statistics Office of Vietnam is the best place to seek data.
    – http://gso.gov.vn
    Additionally, you can find raw data in some financial websites such as:
    – http://www.cophieu68.vn 
    – http://en.vietstock.vn/

  3. The independent, integrity and objectivity of research are questioned.

    Especially, some small securities companies often publish evaluating research to recommend buying stock tickers. Most research is meant for some intentional purposes.
    HSC, FPTS, and VCBS we appreciate their ethical standard more than other companies. So their research is quite believable for consideration in investment decisions. We also recommend you take many different looks for a listed company before you decide to invest in.

  4. High level of herd mentality

    In Vietnam, the proportion of individual investors is high, but their knowledge of financial investment is not at the same level. Usually, they do not have enough discipline in their trading systems and let their emotions make decisions. So when something happens leading to overreacting in the market, you should have the right attitude to face it. There may be good opportunities to buy or sell shares, maybe not.

  5. Market makers

    Vietnam’s market makers’ status under the law is uncertain, but they’re still there. We are able to see their presence in some stock tickers. It could be a financial consulting company, a securities incorporation, an investment fund or a sub-fund. They have their own purposes for affecting the volume and price of tickers. But not all stock tickers have market makers behind them and not all market makers have bad intentions.
    In Vietnam market, they have another negative name for market makers is “driving team” (a group of influenced investors, brokers (sharks), who have the abilities to control the price of stocks in the short term). Hearing some rumors relating to the plan of driving teams and trying to trade follow those rumors. Normally, it doesn’t work very well, or otherwise, investors may receive bad result when buying shares someone trying to sell at that price points.

  6. Foreign Ownership

    Foreign ownership is limited by the law in Vietnam. The Vietnam government doesn’t only limit foreigners own real estates such as land, houses, apartments, etc. But they also restrict foreigners to possess a large share of a company, especially strategy industries such as bank, energy, telecom, military etc. If you invest in a company or an industry in the Vietnamese stock market, you should consider the maximum foreign ownership ratio of the company and the industry that the company belongs to.

Workshop on planning for revising securities law in Vietnam’s stock market

Otherwise, On October 19th, the State Securities Committee of Vietnam had a direct dialogue with the representatives of 13 investment funds of the Association of Asian Securities Exchanges (ATF) and other investors. They discussed how to promote the execution of Decree No. 60/2015 / ND-CP. On top of that, the proportion of foreign investor and None voting depository receipt are 2 biggest issues which have been impeding foreign investors investing in Vietnam’s stock market. In the meeting, SSC also committed to revising the securities law toward to positive direction.

 

Tony Bui

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