What do economists recommend to bond investors?
We had a discussion with Assoc.
“The potential for development of the Vietnamese bond market is very large”
– After the incident that Tan Hoang Minh Group was canceled by the State Securities Commission for 9 bond offerings, the psychology of investors was more or less worried. From the perspective of a financial expert, how do you comment on this move as well as the current market reality?
This correction in my opinion is extremely necessary. With a market that is still young and has developed strongly in recent years like bonds, it is especially important to shock the market, to ensure the purity, transparency and ability to absorb capital. The recent case in my opinion does not represent the majority and a strong move from the regulator will help protect the interests of genuine investors. Further, contributing to the market to avoid consequences later. We cannot let the situation of having an untruthful business deceive investors, saying one thing and doing another.
Regarding the impact, I think that market disturbances, if any, are only temporary and in the medium and long term, bonds – an important capital mobilization channel of the economy will become more and more complete and have more opportunities. development in a sustainable way.
– There are opinions that, it is time to tighten the bond market, including restricting organizations and individuals from participating in the market to avoid overheating or even breakdown. Is this necessary sir?
Completely opposite. Prime Minister Pham Minh Chinh recently affirmed that it is necessary to encourage and create all favorable conditions for organizations and individuals to participate in the market, to operate honestly, in a healthy and effective manner in compliance with the law.
Corporate bonds need to be recognized for the right role. With a reasonable cost, this is the main channel of mobilization to supplement capital for businesses in many national economies. That is, in essence, corporate bonds play a “blood vessel” role to help balance the financial system, prevent capital from being too dependent on the credit system, as well as contribute to diversifying investment channels and products. finance. In countries with developed economies such as the US, Japan, the European Union, Singapore, Korea, and China, this channel accounts for 70-80% of the total capital mobilization of enterprises.
For Vietnam, although this proportion is only about 10%, the market is also moving in line with the world trend. The proof is that in the period 2017-2021, the average growth rate of the corporate bond market is up to 46% per year. Compared with other countries, the development potential of the corporate bond market in Vietnam is clearly still very large. Tan Hoang Minh’s case is in fact just a “worm that makes the soup sad” and the handling will help ensure transparency and safety for investors when participating in the market.
“Choose gold deposit” in the right place, be careful with interest rate traps
– What will happen if the corporate bond market does not circulate well, sir?
As I said above, this is the most important channel to raise capital for businesses and if it is blocked, it can directly affect the whole economy. Take for example the real estate sector. We all know that real estate is a big sector of the national economy. To develop industry, we must have industrial real estate, to develop social and security, the economy needs residential real estate, to develop commerce, we need commercial real estate… In addition, there are goods. Dozens of professions and fields behind real estate. Real estate therefore plays the role of the driving force of development. But if businesses cannot mobilize resources from bonds, there is no way to promote their advantages.
Because it is important, what needs to be done is not to tighten and strangle the capital market, but to purge, correct, and regulate, so that the market goes in the direction of sustainable and long-term development, in the interests of investors. privacy is guaranteed.
– In your opinion, what do we need to do to make the bond market really a place where genuine investors can safely participate?
With a nascent market like Vietnam’s bonds, it’s clear that much work remains to be done. First of all, in my opinion, it is necessary to complete Decree 153/2020/ND-CP on individual corporate bond offerings and transactions with clearer regulations on bond issuance conditions, credit ratings, and purposes of use. use loan…
In addition, in my opinion, we must study and develop a legal framework to develop the secondary bond market. In principle, to upgrade the market from marginal to emerging, we need a secondary stock market, a secondary bond market to buy and sell government bonds, strong corporate bonds. When people are bought and sold again, the market will “rub” itself and there will be a more accurate assessment of bonds.
– What advice do you have for investors at the moment?
Calm down, absolutely no need to panic. Corporate bonds are actually still a safe and profitable investment channel. An important issue for investors is to understand who the bond issuer is, and how the business’s financial situation is to choose a gold deposit. In particular, investors need to be careful with the “trap” of high interest rates. In economics, the higher the interest rate, the riskier, that’s the rule. Some bonds advertise an interest rate of 10-12%, even 15-17%, we need to be more careful because how will businesses produce and do business to pay this interest rate to investors?
– Thank you Sir!
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
