Vietnam Stock Exchange
The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City,
was officially inaugurated on July 20, 2000, and trading commenced on July
28, 2000. Initially, two equity issues were listed, Refrigeration Electrical
Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and
Telecommunication Material Joint Stock Company (‘SACOM’). As of this date,
an additional 20 issues are also listed with a current market capitalization
The Stock Trading Center of Vietnam is also the official mechanism through
which new government bonds are issued, and it functions as the secondary
market for a number of existing bond issues. As of this date there are 120
listed bonds with a total market capitalization of US$866m. All securities
traded on the Stock Trading Center of Vietnam are denominated in Vietnamese
Dong. Par valued is standardized at VND10,000 for equities and VND100,000
for bonds. Trading is conducted daily with two matchings in a morning
session, from 9A.M. to 11A.M.
The State Securities Commission (‘SSC’), a body established formally in
1996, is responsible for capital markets development, licensing of
participants, and the issue and enforcement of regulations. A wide range of
regulations, with significant input from multilateral bodies such as the
International Finance Corporation, have been promulgated, including those
dealing with such issues as insider trading, take-over trigger points and
margin lending. In order to be listed, a company must have been profitable
for at least 2 years, have a minimum capitalization of VND5b (approximately
US$318,000), and have at least 50 shareholders who are not employees of the
company, holding at least 20% of stake. Foreign invested joint venture
companies are technically qualified to list, but in order to do so, they
must be reorganized into joint stock company status. Companies intending to
list must also submit to audit by an approved, independent auditing company.
At the beginning, an overall foreign ownership limit of 20% for equities and
40% for bonds were implemented. In July 2003, in a bid to improve liquidity,
the government raised the foreign ownership limit for equities to 30% and
totally removed foreign ownership limit of a particular issuer’s bonds.
Foreign participants on the Stock Trading Center of Vietnam must register
through a custodian licensed to hold securities on behalf of foreigners.
Once registered, a securities transaction code is issued to the foreign
investor that will permit securities trading.
The mechanism of trading on the Stock Trading Center of Vietnam is via an
automated order-matching system. The capacity of the system is 300,000
orders per day. Currently, trading limits of 5% (for bonds and equities)
either side of the previous close apply. No price restrictions have been set
for newly listed securities but price caps were applied in the case of the
very first day of the market’s operations.
Settlement is centralized through the Stock Trading Center of Vietnam using
the Bank of Investment and Development of Vietnam (BIDV), a state-owned
commercial bank. Several other domestic banks and securities companies have
been authorized to accept custody of securities, with HSBC’s and Deutsche
bank’s Ho Chi Minh City branches currently the only banks providing custody
services for foreign investors. Custody is based on a central depository,
central registry book entry system.
Presently, there are thirteen licensed securities companies. Of these, nine
have been licensed to conduct a full range of securities services including
underwriting, brokerage, custody, research, portfolio management and
trading. The minimum capital required to operate effectively as an
investment bank is VND43b (c. US$2.7m).
The current market capitalization is now US$239m for equities and US$866m
for government bonds.
With the World Bank estimating domestic savings of some US$5b outside the
official economy, considerable liquidity could flow into the securities
markets in time. The SSC in conjunction with the Asian Development bank have
formulated a development plan for Vietnam’s Capital markets which if
successfully implemented would result in 100 listed companies on the Ho Chi
Minh Exchange and a similar number on the Hanoi exchange by the end of 2005
with an associated total market capitalization of between 2 and 3 percent of
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