|Mr. Tran Dac Sinh, director of the Ho Chi Minh City Securities Trading Center.|
The Viet Nam’s stock market has recovered significantly in recent weeks after a long slide. The VN-Index has surged by 20% after reaching the bottom at 400 points in early August.
Some people believe the market has been solidified and stabilized. However, is it actually ready for sustainable growth yet? SGGP has had a discussion with Mr. Tran Dac Sinh, director of the Ho Chi Minh City Securities Trading Center (HSTC), on the matter.
SGGP: What do you think about the market at the moment? Many analysts believe that “shaky” investors have been wiped out of the market. In your opinion, do you think Viet Nam’s stock market has become truly professional?
Tran Dac Sinh: Fluctuation of stock is normal for every market. However, recently, the rise and fall of all simultaneous securities on the market happened very few times and far between. This shows that the knowledge and experience of investors has improved. With the wider participation of foreign investors on the stock exchange and the Prime Minister’s instructions on encouraging foreign investment, Viet Nam’s stock market is likely to fulfill its potential.
The stock market is an equal playground for every investor, whether big or small, professional or not. Encouraging investors to participate is one of the top priorities to boost demand for the market.
Therefore, new investors, who just join the market, should learn step by step and obtain more experience in order to succeed on the market. Our country’s market is only 6 years old. There are many things to do in order to develop, but updating the knowledge for the investing public should be one of the main missions.
|Many people believe that the recent pullback of the market was caused by a huge rise in supply. (Photo: T.C)|
SGGP: Many people believe that the recent pullback of the market was caused by a huge rise in supply. Do you think this is right or not?
Tran Dac Sinh: Finding more “goods” for the market by boosting the equitization process of state-own enterprises is one the strategic solutions for the development of the market. The scale of our market is still too small with the market capitalization of US$3 billion. Therefore, fast growth in the number of listings recently needs to meet the development of the market. In my opinion, the number of listings should be increased to widen the options for investors.
SGGP: In your opinion, what are the achievements of the exchange so far?
Tran Dac Sinh: Firstly, the stock exchange has attracted a large number of investors, boosting the equitization process of state-owned enterprises with the success of the share auctions of nearly 100 state-owned enterprises, bringing back VND5.5 trillion to the state’s budget.
Secondly, the stock exchange has opened a new efficient fund raising channel for investment and development. After 6 years of operation, there has been VND12.5 trillion raised through government’s bonds, urban bonds and for development support funds. There also have been 17 listed companies with 32 issuances to raise fund via the exchange, mobilizing nearly VND 1 trillion.
Thirdly, regulators and participants have retained much experience in managing and developing the market.
|HSTC will transform into the securities exchange. (Photo: T.C)|
SGGP: What is your prediction on stock prices? What is the exchange’s direction of development?
Tran Dac Sinh: Stock prices mainly depend on the supply and demand of the market. As I have said above, the supply will rise, and along with the increasing attention from foreign and domestic investors, the market is likely to be livelier in the near future.
HSTC will be improved in quality of services for investors, changing from a price-matching phase to continual price-matching, allowing brokerage firms to place orders remotely while the room for foreign investors expands.
SGGP: What are HSTC’s plans for development?
Tran Dac Sinh: HSTC will first finish the plan to transform into a securities exchange, which is now up to the approval of the State Securities Commission and Ministry of Finance. HSTC is expected to operate under the new model in 2007.
Currently, we are finalizing the preparation and start building the modern and synchronized trading system to meet international standards. The new system will come into operation by 2008.
The trading system is the “backbone” of the market and plays an important role in opening a new era for Viet Nam’s stock market. During that process, documents instructing the enforcement of the Securities Law and regulation of the new stock exchange will be also written in order to maintain the effective progress of the law and expand the collaboration and alliance with other stock exchanges, especially in human resources development and technology support.
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