VIETNAMSECURITIESMARKETHIGHLIGHTS

Presented byNguyen Quang Long – Deputy Director

Fund Management Department1

* The views expressed are those of Author and do not reflect the views of the SSC.

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Chapter 1: Regulatory challenge in Vietnam

• Social-Economic overview, Institutional framework for securities supervision and Policy Making Hierachy

• The current state of Vietnam’s securities market

• Challenges and hot issues

VietNamSocial- EconomicOverview

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Population(2014): 90 millionLife expectancy (2014): 75Median age: 30GDP per capita (nominal): $2200

BasicEconomicsIndicators

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Institutionalframeworkforsecuritiessupervision

Institutional framework for financial supervision and stability

Government

Ministry of Finance

State Securities

Commission of Vietnam

Insurance Supervisory

Agency

State Bank of Vietnam

Banking Supervisory

Agency

Various Departments

Deposit Insurance of

Vietnam

National Financial Supervisory Commission

8Securities business

Insurance companies

Banking and Finance Credit

Institutions

The SSC’s organization chart

Separate Units

Securities Research and

Training

Department of IT

Vietnam Securities

Review

Functional Departments

Securities Market Development Department

Securities Business Supervision Dept

Fund Management Supervision Dept

Public Companies Supervision Dept.

Securities Issuance Supervision

Inspection Department

Market Surveillance Department

Supporting and Coordination Departments

The SSC’s Office• Rep. Office in

HCM

Legal Department

International Co-operation Dept

Accounting and Procurement Department

Human Resource Department

Entities under SSC’s supervision

HochiminhStock

Exchange

Hanoi Stock Exchange

Vietnam Securities

Depository

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SSC

The functions of departments• Except Securities Market Development Department, all other

functional departments in charge of both supervision (off-site monitoring) and examination (on-site monitoring) in respect of their functions

• If the findings from on-site monitoring are serious and violating the laws, the functional departments would send suspicious cases to the Inspection Department to take suitable measures • Administrative money penalty if evidence is clear• Or further inspection

• All departments are in charge of making policy relevant to their functions

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Policies Making Hierachy• Laws: made by the National Assembly: e.g. Securities Law,

Enterprise Law, Depository Institutions Law• Government Decrees: Issued by Government to implement

the laws• Prime Minister Decisions: Sometimes to be issued to

implement specific provisions of Government Decrees • Ministerial Circulars: to implement Government Decrees• SSC’s Decisions: to guide securities businesses

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ThecurrentstateofVietnam’ssecuritiesmarket

VNIndex

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Source: HSX

Market Cap/GDP

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Source: SSC

Number of Financial Institutions

2009 2010 2011 2012 2013 2014 2015 2016

Securities Firms

105 105 105 105 104 85* 81* 79*

Fund managers(active)

46 47 47 46 46 43* 43* 46

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Source: SSC

* The number of securities firms and fund managers are declining due to M&A, suspending operations, and withdrawing licenses.

Trading AccountsYears Domestic investors Foreign investors Total

Individuals Institutions Individuals Institutions

2000 2,908

2002 13,607

2004 21,600

2005 29,065

2006 110,652

2007 303,190 800 7,949 200 312,139

2008 517,463 2,003 11,465 497 531,428

2009 807,558 2,662 12,067 627 822,914

2010 1,038,730 3,468 13,035 794 1,056,027

2012 1,213,478 4,814 13,613 1,339 1,233,244

2014 1,338,302 5,487 14,361 2,043 1,360,193

2016 1,685,597 7,439 16,850 2,503 1,712,38916

End of 2016

Listed Companies 695

OTC - registered 377

Average trading value $30 mil/ trading day

No of Funds Managed 30

- Open-ended 18

- Close-ended 1

- ETF 2

- REITs 1

- Member fund 8

Total NAV ~$40 million

Total AUM ~$7 Billion (mostly from Insurance Company) 17

1. Equity side:- Quality of listed Companies (Reports, public information annoucement,…)- Quantity of investable listed companies (small in size, low free-float, few big companies)- Lack of understanding about CG (Vietnam SSC is proposing a Decree about CG)

2. Bond market:- Lack of CRA- Tiny corporate bond market (Mostly dominated by government bond)- Not very liquid

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• 3. Fund Management Industry: • Internal challenges:

• Lack of awareness from investor due to limited resource;• Lack of high skill staffs (due to new industry)• Lack of surveillance bank (trustee) due to costs of operation• Limited distribution channels

• External challenges:• High Bank deposit interest rates (~7% in 2017)• Competition form Banks, Insurance companies and Stock-brokers

(conflict of interests and targets)• Alternative investment channels• Culture habit

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• 4. Power of the SSC and the effective co-operation between organizations:• Lack of Investigative power• Lack of effective information sharing between SSC and other

organizations (improving)• 5. Absent of supporting elements

• No derivatives market (launching soon)• No USD hedging (for foreign investors)• Slow privatization progress (due to number of reasons)

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