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Ten outstanding securities events in 2021

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The year 2021 witnessed many fluctuations in the economy, in general, and the stock market in particular. The Securities Journalists Club has held an annual announcement of ten securities events in 2021.

Ten outstanding securities events in 2021

The ten most outstanding annual stock events are voted by all members of the Securities Journalists Club and announced before the end of the year. 

1. Solving the problem of order congestion on the HOSE, liquidity is released

Despite the Covid-19 pandemic, Vietnam’s stock market had robustly grown in terms of points, liquidity, and the number of investors. However, it is also the reason for the prolonged congestion on the HOSE. Order congestion had become a hot keyword on many forums and newspapers from the end of 2020.

In the first half of 2021, although there were many solutions, order congestion continued to happen and tend to worsen. It reached the climax in which the HOSE had to halt trading activities in the afternoon trading session on June 1, 2021. Order congestion not only caused frustration, discomfort, and losses to investors but also great pressure on the management agency, the HOSE, and related units.

According to the plan, after 100 days, on July 5, 2021, the HOSE officially put into operations the solution to troubleshoot the transaction system at the HOSE in collaboration with FPT built on the system software of the HNX. The new trading system, with an order capacity of up to 3-5 million orders per day, operated stably and smoothly, meeting the trading demand of investors, although the market continuously set new peaks.

The new trading system has untied market liquidity, then many new records have been made. On average, the trading value of the whole market in 2021 by December 17, 2021, exceeded VND26.21 trillion per trading session –the highest level in the past 21 years of market operation. Especially, the liquidity on the HOSE approached the threshold of VND45.56 trillion per trading session on December 23, 2021. Not only on the HOSE, market liquidity on the HNX and the UPCoM also made a breakthrough, reaching nearly VND3.13 trillion per session and more than VND1.59 trillion per session, respectively.

2. Stock market capitalization exceeds 120 percent of GDP

The size of the stock market increased sharply, reaching 122.2 percent of GDP on November 12, 2021. According to the project on restructuring the stock market and insurance market in the 2020-2025 period, the Government set a target that the market capitalization of securities would hit 120 percent of GDP by 2025. Thus, with the above market capitalization, the target was achieved four years earlier.

Stock is the investment channel that receives the most attention from investors in relation to the mass investment channels in the economy. Amid the context that interest rates were kept at a low level, and many other investment channels encountered obstacles due to the pandemic, the stock market became more attractive to the cash flow. The stock market, hence, had an impressive growth rate in 2021.

3. A series of measures to rectify the corporate bond market

Although the heat decreased compared to 2020, the corporate bond market has continued to boom in 2021.

According to data from the Ministry of Finance, by November 2021, the volume of corporate bond issuance exceeded VND495 trillion. Of which, that for private placement accounted for 94.5 percent. Banks and real estate enterprises continued to occupy the first and second positions in terms of issuance volume.

However, the heat of the corporate bond market in 2021 lies in the risk and quality improvement warnings coming from state management agencies.

Never before has the State Bank of Vietnam and, especially, the Ministry of Finance continuously given warnings about potential risks of corporate bonds to investors like that. Noticeably, the Prime Minister also issued a written request to relevant ministries and sectors to strengthen management, step up inspections, and handle violations in this market.

Based on the inspection results at nine securities companies and two issuers, the State Securities Commission sanctioned administrative violations against two issuers, namely VsetGroup Corporation Joint Stock Company, Apec Group Joint Stock Company, and Vietnam International Securities Joint Stock Company (VIS).

In addition, in terms of legal policy, the SBV also issued Circular No.16. Meanwhile, the Ministry of Finance has also been urgently developing a draft to issue a Decree to replace Decree No.153 to enhance the quality of the corporate bond market.

4. Newly-opened securities accounts set a record

The year 2021 saw a record increase in the number of securities accounts. By the end of November this year, the total number of securities accounts was 4.08 million, while it was merely 2.77 million accounts at the end of 2020. Thus, in the 11 months of 2021 alone, more than 1.31 million new accounts were opened, of which domestic individual investors opened 1.306 million accounts, 3.3 times higher than in the whole year of 2020. 2021 is a record year for attracting investors to participate in the market.

5. The scale of capital increase of listed companies is at a record high

According to estimated reports, in 2021, 147 listed companies were expected to increase their equity by 3.8 percent, equivalent to VND102.6 trillion through share issuance. If enterprises successfully carried out the issuance plan, 2021 would be a record year for the volume of capital mobilized through the issuance of shares of listed companies. Compared to 2019 and 2020, this figure is 1.4 times and more than five times higher, respectively. This number is impressive because, under the strong impact of the Covid-19 pandemic, the capital mobilization in 2020 declined compared to 2019 but had a strong rebound in 2021.

The robust increase of the stock market from the beginning of the year is an opportunity for many enterprises to mobilize capital to expand production and business activities in the context that the economy is gradually recovering.

6. Successfully rescuing Vietnam Airlines

On July 7, 2021, Vietnam Airlines officially signed credit contracts with three commercial banks, including Southeast Asia Commercial Joint Stock Bank (SeABank), Vietnam Maritime Commercial Joint Stock Bank (MSB), and Saigon-Hanoi Commercial Joint Stock Bank (SHB), with a total amount of VND4 trillion. This amount of money was poured into Vietnam Airlines by September 20, 2021.

Along with that, on September 13, the State Capital Investment Corporation (SCIC) also disbursed nearly VND7 trillion to buy shares at Vietnam Airlines under the right to buy shares of State shareholders according to the resolution of the National Assembly and the Government.

Thus, the rescue package of VND12 trillion that the National Assembly approved in December last year was disbursed by State shareholders. The capital supplement for Vietnam Airlines also ends the largest-ever rescue of a joint-stock company that the State performed as the main shareholder. This support package is expected to help Vietnam Airlines overcome the crisis caused by the Covid-19 pandemic.

7. Record net selling by foreign investors

The stock market sublimated when the cash inflow continuously made new records, thanks to the strong participation of the domestic cash flow. However, 2021 is not a joyful story of foreign capital flows in the market. Foreign investors made a record net selling in many years. According to statistics, by mid-December, foreign investors have net sold nearly VND60 trillion, officially surpassing the US$2.5-billion-dollar mark.

However, the good news is that the net selling of foreign investors was also the general trend of many international stock markets when the pandemic occurred. Vietnam’s stock market still managed to maintain an impressive upward momentum because the net selling volume of foreign investors was fully absorbed by domestic ones. In addition, foreign investors’ net selling no longer affected investors’ sentiment as much as in previous years. Besides, according to the regulatory agency, the net withdrawal of foreign capital is negligible and much lower than in many other emerging and frontier markets. Although foreign investors are net sellers, foreign cash flows remain in Vietnam and look for opportunities.

8. VN-Index set a new record high

This year, Vietnam has suffered severe impacts from the Covid-19 pandemic, causing GDP in the third quarter to post a negative growth of 6.17 percent. However, the stock market got a remarkable growth, marked by surpassing the historic peak of 1,200 points, established during the 20-year history of the Vietnamese stock market with two hits in 2007 and 2018, in April 2021. After the VN-Index hit this record high, the market has continued to sublimate and reached a new peak of around 1,500 points.

Although the market reached new peaks, the valuation level continuously fell because of the outstanding growth in business results of listed companies. The P/E ratio of the market reached 34 times when the VN-Index peaked at 1,200 points in 2007 and 22 times in 2018, but it is just over 17 times when the VN-Index currently hovers around 1,500 points.

9. 25 Years of Traditional Day of the securities industry and the launch of the Vietnam Stock Exchange

On November 28, 2021, Vietnam’s securities industry officially celebrated 25 years of development. Vietnam’s securities industry and stock market have overcome many difficulties and challenges and achieved many proud results, affirming that the policy of building a stock market is right.

Vietnam has established a stock market institution in the right direction, following the economic development in each period, becoming an important medium and long-term capital mobilization channel for the economy, gradually approaching international standards and the process of international and regional integration. With these achievements, the securities industry has created a solid foundation to bring Vietnam’s stock market to a new stage with stronger, better quality, and more sustainable development.

A new milestone of the stock market in 2021 is that the Vietnam Stock Exchange was officially launched on December 11, realizing the Prime Minister’s Decision No.37 signed in 2020.

The establishment of the Vietnam Stock Exchange will unify the organizational model, mechanisms, policies, development thinking, and information technology infrastructure to serve the market. Especially, it will contribute to increasing the scale and position of Vietnam’s stock market, speeding up the upgrade process, meeting eligibility criteria for integration, and attracting domestic and foreign investment flows better.

10. Legal mark of the market

In early 2021, the amended Law on Securities, the Law on Enterprises, the Law on Investment, and the decrees guiding the law implementation took effect simultaneously, creating a new legal corridor for the operation of the business community and the stock market.

At the implementation level, Circular No.57/2021/TT-BTC of the Ministry of Finance chose July 20, 2021 – the day Vietnam’s stock market marks its 21 years of opening – as the date to announce the roadmap to rearrange the Vietnam stock markets.

According to the roadmap, by the end of December 31, 2022, the Hanoi Stock Exchange will unify the organization of a bond and derivatives trading market.

As for the HOSE, by the end of June 30, 2025, it must unify the organization of a trading market for listed shares, fund certificates, covered warrants, and a stock trading market of unlisted organizations.

Another legal mark of 2021 is the announcement of the “List of industries with market access conditions applied to foreign investors” on August 31 by the Ministry of Planning and Investment. Previously, many enterprises and investors were confused because Decree No.31/2021/ND-CP only regulated general industries, such as advertising services, educational services, veterinary services, and family-related services. However, the above list has clearly explained everything so that based on that, enterprises can know to expand the room to which extent.

Source: Sai Gon Giai Phong

Source: https://vietnamnet.vn/en/business/ten-outstanding-securities-events-in-2021-805422.html

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Vietnam central bank to raise policy rates by 100 bps

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Vietnam’s central bank announced on Thursday it would raise its policy rates by 100 basis points, in a rare monetary tightening move aimed at keeping inflation under 4% this year.
Effective Friday, the refinancing rate will be raised to 5.0% and the discount rate to 3.5%, the State Bank of Vietnam (SBV) said in a statement on its website.
The move followed this week’s rate hike by the U.S. Federal Reserve and similar steps taken by central banks around the region as prices rise across the world. Vietnam’s prime minister had earlier on Thursday urged the central bank to reconsider policy rates.
Can Van Luc, an economist with the Bank for Investment and Development of Vietnam and an advisor to the government, said the rate hike “is in line with the global trend and is expected to help better control inflation in Vietnam.”
“I don’t think this will affect Vietnam’s official economic growth target of 6.0%-6.5% for this year,” Luc said. “GDP growth is actually expected to be 7.0%-7.5% this year.”

Vietnam’s consumer prices in August rose 3.6% from end-2021. The government has targeted inflation at below 4% this year.
The dong currency fell for nine consecutive sessions to 23,700 per dollar, the lowest since at least 1993, according to Refinitiv Eikon data.
The daily reference rate set by SBV was recorded at 23,316 dong per dollar on Thursday, the weakest since at least 2005, data showed.
SBV Governor Nguyen Thi Hong said earlier on Thursday that Vietnam’s biggest economic challenge at present was to keep inflation under control.
The bank on Thursday also said it would raise caps on interest rates of dong-denominated deposits from Friday, by 0.3-1.0 percentage points, depending on maturities.

Source: https://tuoitrenews.vn/news/business/20220922/vietnam-central-bank-to-raise-policy-rates-by-100-bps/69204.html

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Chinese mushrooms branded with Vietnam’s VietGAP logo on sale at Bach Hoa Xanh

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Ho Chi Minh City-based grocery chain Bach Hoa Xanh has been selling made-in-China mushrooms in the guise of quality local goods bearing Vietnamese Good Agricultural Practices (VietGAP) tags, according to an investigation by Tuoi Tre (Youth) newspaper.

Investigative journalists from Tuoi Tre found that Dong A Trading and Production JSC, based in Linh Dong Ward, Thu Duc City, a district-level unit under Ho Chi Minh City, had been allegedly providing mislabeled products to Bach Hoa Xanh.

In order to bear the VietGap label, fruits and vegetables must be grown using methods that ensure the safety and cleanliness of the products.

In a statement sent to Tuoi Tre on Wednesday, Bach Hoa Xanh said it immediately ceased the sale of all products supplied by Dong A and asked the company to check the quality, origin, and supply process of its products.

The grocery chain also issued an apology to customers.

“Bach Hoa Xanh’s aim is to comply with regulations on the product traceability and ensure clear origins for its products,” the chain said.

“In this case, Bach Hoa Xanh understands the importance of better controlling the origin and quality of commodities.

Vegetables are imported from China to Hoc Mon wholesale market in Ho Chi Minh City. Photo: Bong Mai / Tuoi Tre

Vegetables are imported from China to Hoc Mon wholesale market in Ho Chi Minh City. Photo: Bong Mai / Tuoi Tre

“Bach Hoa Xanh purchased only mushrooms from Dong A. On June 8, 2022, we signed a contract with Dong A to use their products for up to three percent of the mushrooms sold in our stores.

“After this case, Bach Hoa Xanh will work with all of our other suppliers to better control our product sources.”

Bach Hoa Xanh claims the most important criteria it evaluates when purchasing products are quality, hygiene, and safety.

Imports sold in its stores also meet Vietnam’s requirements, including having their origins and quality verified by and registered with relevant agencies.

Fake and smuggled goods are prohibited from hitting the shelves.

Bach Hoa Xanh claims its current policy is not to compromise with suppliers who skirt these regulations.

Violations come to light

With an abundant supply and prices as low as half of what Vietnamese products sell for, masquerading Chinese produce as ‘grown-in-Vietnam’ is becoming commonplace at supermarkets and convenience stores looking to improve their bottom lines.

Last month, Tuoi Tre reporters went undercover as Dong A Company workers and discovered that the issue of fraudulent produce stretches beyond the produce sold at a single grocery store chain.

During their investigation, the undercover reporters noticed a small mushroom processing room at the Dong A facility that had been sectioned off from the primary vegetable processing area.

Inside the room, workers were replacing packing branded by a company named ‘Ready Food’ with new labels and tags that included the words ‘fresh’ and other Dong A insignia.

These ‘new’ 300-gram trays of sundry, oyster, king oyster, and enoki were filled with produce that had been sourced from China and given ‘fresh from farm to table’ stickers together with a VietGap logo issued by the Vietnamese Ministry of Agriculture of Rural Development.

Elsewhere in the mushroom processing room, 125-gram bags of white linhzhi mushrooms labeled as ‘made in China’ that had been imported and distributed by Loi Hao Gia Co. Ltd. were repackaged into new 150-gram trays, renamed as ‘beech mushrooms’ and given stickers claiming the products were ‘Fresh Vegetables’ and ‘fresh from farm to table.’

Any traces of these products’ Chinese origins were removed.

The fact that these mushrooms had all originated in China was corroborated by a veteran Dong A worker.

Another Dong A worker told the Tuoi Tre reporters that these relabeled and repackaged mushrooms were to be delivered to Bach Hoa Xanh grocery stores.

Sure enough, while the reporters were still on-site at the Dong A facility, a green truck bearing the Bach Hoa Xanh label pulled up to the loading dock where workers wearing shirts that read ‘Toan Tin (Fully Trusted) Logistics’ began loading the truck with mushrooms.

Fully Trusted Logistics JSC is an arm of Mobile World Investment Corporation, the operator of Bach Hoa Xanh.

Workers replace the packaging of Chinese seafood mushrooms with plastic bags featuring a Dong A Trading and Production JSC logo. Photo: Bong Mai / Tuoi Tre

Workers replace the packaging of Chinese seafood mushrooms with plastic bags featuring a Dong A Trading and Production JSC logo. Photo: Bong Mai / Tuoi Tre

Dong A claims a pillar of its mission is ‘Spreading Dong A’s spirit – connecting the community, and being an important part in the supply chain of agricultural products in Vietnam to increase the value of and ensure the sustainable development of Vietnamese agricultural products.’

The reporters followed the truck to Bach Hoa Xanh’s central warehouse on Tran Dai Nghia Street in Binh Chanh District, Ho Chi Minh City, where the Dong A-branded mushrooms were unloaded.

An employee at the warehouse said the products were destined for Bach Hoa Xanh’s retail stores.

As part of their investigation, the Tuoi Tre reporters visited a mushroom stall run by Loi Hao Gia in Thu Duc wholesale market.

Gia’s stall specializes in enoki, seafood, king oyster, brown and white lingzhi, and fresh shiitake mushrooms.

According to staff, all of these mushrooms had been imported from China.

“Only the [food suppliers’] packaging is theirs. They buy our mushrooms and replace the packaging and labels to make them their own,” one staff member claimed.

Consequences an afterthought

Ho Chi Minh City’s Thu Duc and Hoc Mon wholesale markets have recently seen a huge inflow of vegetables from both China and from across Vietnam.

These products include napa cabbages, cabbages, onions, carrots, and turnips, and most seem to have had their stamps and labels tampered with.

At Thu Duc wholesale market, relabeling is so rampant that stall owners occasionally remove and replace Chinese labeling in plain sight.

According to H., a trader at Thu Duc wholesale market, the wholesale price for Chinese onions is just VND15,000 (US$0.63) per kilogram compared to nearly double for onions grown in Da Lat, a greens hub of Vietnam.  

In addition to their lower prices, Chinese onions can also be stored for up to two weeks. Da Lat onions, on the other hand, have a shelf life of about five days.

“Only three to four percent of traders choose Da Lat greens. Most mainly sell [China-originated] produce,” H. shared, pointing out that Chinse cabbages, for example, are bigger and have better coloring.

H. also noted that Chinese and Da Lat cabbages both sell for about VND15,000 per kilogram but consumers prefer the Chinese because of their longer shelf life – six days versus three days.

After taking mushrooms from Dong A Trading and Production JSC, a Bach Hoa Xanh truck transports the products to the grocery chain’s central warehouse in Binh Chanh District, Ho Chi Minh City. Photo: Q.B. / Tuoi Tre

After taking mushrooms from Dong A Trading and Production JSC, a Bach Hoa Xanh truck transports the products to the grocery chain’s central warehouse in Binh Chanh District, Ho Chi Minh City. Photo: Q.B. / Tuoi Tre

Linh, a vendor at Hoc Mon wholesale market, noted that the packaging for the carrots, potatoes, onions, and fruits sold at the market all displays Chinese labeling, but when they are distributed to wet markets unpackaged, sellers there can easily dupe customers into believing they were cultivated elsewhere.

“Vietnamese people don’t like poor-quality Chinese agricultural products, so most sellers say their products were farmed in Da Lat, the U.S., or Japan,” Linh said.

“This also lets them sell their produce for double or triple the price.”

Chinese agricultural products overwhelm Vietnamese market

According to Thu Duc wholesale market representatives, about 550 metric tons of Chinese goods are brought into the market each night.

Many of these products, such as potatoes, carrots, napa cabbages, garlic, grapes, and pears, are sold at the market throughout the entire year.

Their prices are also considerably cheaper than their counterparts grown in other countries. 

Chinese apples, for example, cost VND35,000 ($1.5) per kilogram while U.S. gala apples sell for VND75,000 ($3.2) per kilogram.

In addition, Chinese and Korean pears are sold at VND35,000 and VND65,000 ($2.8) per kilogram, respectively.

Another case in point is garlic, which fetches VND25,000 ($1.1) per kilogram if grown in China but VND300,000 ($12.7) per kilogram if planted on Vietnam’s Ly Son Island.

The price of Da Lat pink potatoes is double that of Chinese yellow potatoes, at VND28,000 ($1.2) and VND14,000 ($0.59) per kilogram, respectively.

While the supply of many local goods, such as Vinh Chau red onions, Da Lat white onions and carrots, and Hanoi cauliflowers, fails to meet demand, Chinese products are abundant and fetch low prices.

Chinese red onions cost just VND25,000 ($1.1), Chinese white onions and carrots VND15,000, and Chinese cauliflowers VND35,000.

Committing violations

As per Decree 43/2017/ND-CP, organizations and individuals must take responsibility for labelling products, including secondary labels, in an honest, clear, and accurate manner which shows the nature of the products, according to a Ho Chi Minh City lawyer.

Imported goods with improper labels may feature secondary labeling but the original tags need to remain intact on the packaging.

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Source: https://tuoitrenews.vn/news/business/20220922/chinese-mushrooms-branded-with-vietnams-vietgap-logo-on-sale-at-bach-hoa-xanh/69191.html

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Asia Coffee-Vietnam market tepid ahead of new crop season, low supplies in Indonesia

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Coffee trading remained subdued in Vietnam this week due to a lack of beans, with traders awaiting the new crop season that starts next month, while supplies begun to dwindle in Indonesia at the end of harvest there.

Farmers in the Central Highlands, Vietnam’s largest coffee-growing area, sold beans COFVN-DAK at 46,900-47,200 dong($1.98-$1.99) per kilograms, down from last week’s 47,000-48,200 dong range.

“Trade is muted now as everyone is waiting for new beans,” said an exporter based in Ho Chi Minh City.

“We are assessing the current situation ahead of the harvest amid stronger dollar, raising freight rates, higher production costs.”

Traders in Vietnam offered 5% black and broken-grade 2 robusta COFVN-G25-SAI at a discount range of $200-$250 per tonne to the November contract.

Another trader said coffee growing area was bracing for more rains but rains at the time helped pick off weak cherries from the cherry before the harvest.

November robusta futures on ICE LRCc2 settled down $10, or 0.4%, at $2,226 per tonne on Wednesday.

In Indonesia’s Lampung province, discounts for Sumatran robusta beans were unchanged this week, local traders said.

One trader offered $140 discount to the November contract, while another offered $50-$60 discount to the October and November contracts.

“Volume of beans has started to come down as harvest has ended, while local buyers are still trying to buy more beans,” one of the traders said.

Source: https://tuoitrenews.vn/news/business/20220922/asia-coffeevietnam-market-tepid-ahead-of-new-crop-season-low-supplies-in-indonesia/69199.html

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