Billion dollar stocks
At the end of the last trading session of August, all stock indices increased. Specifically, VN-Index increased by 10.89 points to 1,224.05 points; HNX-Index increased by 1.79 points to 249.75 points and UPCoM also increased by 0.64 points to 93.32 points. The increase before the long September 2nd holiday is a positive point of the stock market, especially the trading volume and value also increased compared to the previous session. Specifically, the total trading value reached over 24,000 billion VND, equivalent to about 1 billion USD.
In the whole month of August, the VN-Index only increased slightly by nearly 2 points. However, compared to the low point after the unexpected plunge on August 18 when the VN-Index lost more than 55 points in just one session, the index has recovered and increased by nearly 4% after only 2 weeks. In total, after 8 months, the VN-Index has increased by 21.5% and the HNX-Index has also increased by 21.6%. The market's trading value alone has tripled and maintained at a transaction value of billions of USD per session or even up to 1.2 billion USD.
Stock trading has been active again in recent months.
There are many positive factors that are helping investors tend to turn to the stock market. These include the continuous decrease in bank deposit interest rates, the macroeconomics, although not yet growing strongly, has begun to show many positive signs, and the Government is still promoting public investment capital to be disbursed more strongly... Moreover, among traditional investment channels, only stocks are currently easier to trade. Because the real estate market is still quite quiet; the price of gold is almost no longer attractive to many people, especially young investors.
According to Mr. Nguyen Nhat Khanh, Head of Investment Consulting Department of Mirae Asset Securities Company, deposit interest rates have started to decrease since the end of March. Since then, many people who have reached maturity do not want to keep their money in the bank anymore because the interest rate has dropped too low and they want to find investment channels with higher returns. Not only that, a series of policies from the Government have been implemented such as removing legal difficulties for real estate projects; reducing value added tax, reducing fees... to support businesses and stimulate consumption. In general, monetary and fiscal policies aimed at supporting economic development have begun to have an effect on many sectors.
Dr. Nguyen Huu Huan (University of Economics, Ho Chi Minh City)
"The stock market is a market of expectations. When investors see the policy goals, especially the interest rate reduction that helps many businesses operate more smoothly, they will start buying stocks in advance without waiting for real business results. For example, real estate stocks have recently increased strongly again and contributed positively to the recovery of the stock market in general, although the business results of many businesses need more time to recover," Mr. Nguyen Nhat Khanh added.
Problems and Solutions: Solutions to Restore the Corporate Bond Market
Bond market begins to move
While the stock market has recovered strongly since the beginning of the second quarter of 2023, the bond market has also shown signs of thawing. It is estimated that in August, there were 18 successful corporate bond issuances with an issuance volume of more than VND 21,500 billion, an increase of 70% compared to July. Of which, issuing banks accounted for more than 50% such as ACB successfully mobilized VND 6,500 billion; OCB issued VND 2,000 billion, MSB issued VND 1,000 billion. At the same time, many real estate enterprises also increased bond issuance again.
However, according to data from the Ministry of Finance, from the beginning of the year to the end of July, 36 enterprises issued individual corporate bonds worth VND62,300 billion, down 77.8% compared to the same period in 2022. These issuances brought the outstanding balance of individual corporate bonds to VND1,020 trillion (as of July 28), equal to 10.8% of GDP in 2022 and equal to 8.2% of the total outstanding credit of the economy. Explaining the above results, the agency said that the volatile market context caused many enterprises to proactively buy back bonds before maturity to restructure capital sources with the volume of early buybacks being VND135,300 billion, up 56.3% compared to the same period in 2022.
If the business results of many enterprises in the third quarter of 2023 are better, foreign investment capital flows into Vietnam continue to grow and public investment disbursement is on schedule, the stock market will be more positive and last until the first quarter of 2024. This will make it easier for enterprises to raise capital through stocks when trading is bustling. The corporate bond market alone still needs more time because many issuers are still having difficulties in paying principal or interest on bonds, making investors hesitant.
Mr. Nguyen Nhat Khanh, Head of Investment Consulting Department, Mirae Asset Securities Company
Dr. Nguyen Huu Huan (Ho Chi Minh City University of Economics) commented that the stock market's recovery is mainly due to "cheap" money flows when interest rates continuously decrease. Many investors also expect that policies to promote economic development will recover and that many businesses' business activities will gradually improve. Thanks to that, capital flows quickly find their way to stocks because they are easy to buy, easy to sell and have high profitability. This will be more positive and will also spread to capital mobilization by companies through the stock market. Normally, after stocks increase, it will also contribute to stimulating the real estate market. Currently, the real estate market is also starting to show signs of recovery. However, Mr. Huan also said that monetary policy needs to be applied "in the right dose" and cautiously to avoid the phenomenon of cheap capital flowing strongly into speculative activities, causing the stock market to only recover in the short term.
Regarding the bond channel, Dr. Huan assessed that the market is in a crisis of confidence, so it cannot recover as quickly as stocks. The number of enterprises successfully raising capital through bonds is still quite small. Therefore, the Government still needs to consider more solutions. That is, continuing to solve internal problems, having policies to encourage investors to participate in the market. Reality shows that the risk level of the corporate bond market in Vietnam is higher than stocks, although in other countries it is the opposite. Therefore, solutions are needed to regain investors' confidence, such as having a bond capital insurance market according to international practices.
Source: https://thanhnien.vn/thi-truong-co-phieu-trai-phieu-dan-hoi-phuc-185230901232748574.htm
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