Developing a safe, transparent, efficient and sustainable capital market

Creating conditions for businesses to exploit capital market

On April 22, Prime Minister Pham Minh Chinh chaired the ”Conference to develop a safe, transparent, efficient and sustainable capital market in order to stabilize the macro-economy and ensure major balances of the capital market. economy”.

A clear message emphasized by Prime Minister Pham Minh Chinh is to create all favorable conditions for market participants, which have healthy, efficient operations and comply with the law.

In fact, the capital market has been an effective mobilizing channel for many businesses over the past 30 years, an effective lever for many businesses to make great progress along with the growth of the economy. .

The capital market to serve honest, transparent businesses has shown remarkable efficiency. Illustration.

26 years ago, Ree Refrigeration Electrical Engineering Joint Stock Company first mobilized convertible bonds, although at that time there was no law regulating the international issuance of corporate bonds. The Ministry of Finance has approved this as a pilot case. Thanks to that, the business has successfully called for 5 million USD, with an interest rate of 4%/year. Up to now, the business has continued to grow and has mobilized thousands of billions of VND more from the capital market.

A representative of Vietcombank also said that the corporate bond portfolio is always controlled harmoniously at only about 1% of the total loan balance. With strict control, this portfolio is classified as group 1 debt and the issuer is also doing business efficiently and paying on time.

“The investment and management of Vietcombank’s corporate bonds strictly comply with legal regulations, are managed with the same standards as lending activities, in order to control cash flow and capital use purposes,” said Mr. Pham Quang Dung – Chairman of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) said.

Also in the last 5 weeks, foreign investors have net bought stocks and fund certificates with a value of 3,589 billion dong, showing their confidence in the Vietnamese stock market.

Completing the legal framework according to the development reality of the capital market

The capital market to serve honest, transparent businesses has shown remarkable efficiency. However, over the past time, there have been phenomena of price manipulation and price manipulation. In particular, there have been organizations and individuals that have committed serious violations that must be handled as Prime Minister Pham Minh Chinh said that “worms can’t make the soup pot”, affecting the mobilization of central capital. and long-term in the market, affecting investment confidence both at home and abroad, affecting the whole economy.

In parallel with the handling of violations, in the coming time, the Ministry of Finance said that the management agencies will continue to work closely to perfect the legal framework according to the development reality of the capital market.

Mr. Ho Duc Phuc – Minister of Finance said: “The Ministry of Finance will urgently submit to the Government to amend the regulations on the issuance of securities. individual corporate bonds in Decree No. 153 in the direction of reasonable tightening, strict management of securities companies that advise on issuance, weak enterprises are not allowed to issue; narrowing down the goal of mobilizing bonds only for investment and project implementation; After issuing, enterprises must immediately notify the Stock Exchange and the State Securities Commission and regularly publish information on the use of money from bond mobilization.

The Ministry of Finance will also study and propose to the Government to submit to the National Assembly for an overall review of the provisions of the Securities Law, including the scope of public issuance, private placement, the concept of professional investors and regulations on handling violations.

“The capital market has a positive development, but there are still many difficulties and challenges that need to be solved for sustainable development. Accordingly, in the coming time, the State Bank will continue to closely coordinate with the ministries, industry to promote a healthy, transparent and efficient market”, said Ms. Nguyen Thi Hong – Governor of the State Bank of Vietnam.

Recommendations for capital market development

It is a fact that the banking system mainly mobilizes people’s short-term deposits, but still has to spend a part for medium and long-term loans. If this ratio is out of control, there may be potential risks. It turns out that up to 82% of the bank’s total capital mobilization is short-term capital.

Meanwhile, a medium and long-term capital channel like the bond market is still too modest compared to the region. Therefore, it is necessary to develop medium and long-term capital channels such as stocks and bonds as international practice.

As the image mentioned by Prime Minister Pham Minh Chinh, it is like a lever – if one side of the money and credit market is too burdened, and the capital market is too weak, it will cause an imbalance. financial markets and the economy as a whole. During the conference on April 22, many frank recommendations from experts were also recorded to build a safe, transparent, efficient, and sustainable capital market structure.

Mr. Andrew Jeffries, Director of the Asian Development Bank (ADB) in Vietnam said: “Required credit rating is a requirement that is being implemented in many countries around the world and in the region such as Thailand, This promotes transparency and stability of the bond market, giving investors more tools to evaluate their investment instead of just looking at high interest rates. The responsibility also helps issuers gain confidence to raise capital with a long term and lower costs.

“In the securities law, the securities companies are assigned to the sellers. If you buy in the primary market and then sell them to professional investors to confirm that, I think there will be a conflict of interest because if they want to try to sell their goods, they will find ways to make the other person eligible to buy. I suggest the Government review Article 11 of the Law on Securities and Decree 155 on conditions for professional securities investors,” said Mr. Phan. Duc Hieu, Standing member of the Economic Committee of the National Assembly expressed.

Mr. Truong Trong Nghia, Ho Chi Minh City’s National Assembly Delegation suggested: “In the context that we expand the capital market, there will be more money entering the market to promote the economy, so it is necessary to have a system of tools. more modern cash flow control I think maybe the cashless control through the banking system will know where all the money goes, whether it’s bond cash flow or credit cash flow and not need to rely heavily on collateral, then to avoid speculative cash flows, it should not be equated with no investment in real estate because it will often hinder the development of the economy.”

Promulgating appropriate and effective mechanisms, institutions and policies, not too tight, but not too loose to protect genuine and responsible investors when participating in the capital market. repeatedly emphasized by Prime Minister Pham Minh Chinh.

“President Ho Chi Minh said that what is old but bad must be abandoned, and what is old is not bad but troublesome must be modified accordingly. On that basis, the Government has clearly expressed its stance of strict and decisive handling. list of wrongdoings in order to make the market transparent and protect investors, businesses and people as delegates mentioned a lot on this issue. It will affect the medium and long-term capital mobilization, the bond and stock market, the policy of capital market development, the confidence of domestic and foreign investors and affect the economy of our country in general”, Prime Minister Pham Minh Chinh emphasized.

After the meeting on April 22, the Government will have a document to conclude, consider and issue a resolution on the development of a safe, transparent, efficient and sustainable capital market.

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