Developing a safe and transparent capital market

If the economy is like a body, then the main sources of capital are the blood to feed the body. When a bad cell appears, it can not only harm one part, but can also affect the whole body.

The financial markets have witnessed what can be considered as a few boils in the body. The solution is to remove them to avoid affecting the body, the economy in general.

Recently, at the “Development Conference capital market safety, transparency, efficiency and sustainability in order to stabilize the macro-economy and ensure major balances of the economy”, a message throughout the Prime Minister emphasized that anyone who violates it will be handled, along with creating all favorable conditions for market participants, which operate in a healthy, efficient manner and comply with the provisions of the law.

The authorities recommend that investors should be alert, not affected by false and unverified rumors, and closely monitor information from official sources. (Illustration)

The violations that have just occurred in the market are not representative of the entire market and the actions to sanction violations are aimed at purifying the business investment environment, ensuring publicity and transparency, thereby helping the market to improve its performance. The capital market has achieved sustainable development, strengthening the confidence of investors, and the market as a whole. Thus, the capital flow for new economic activities is smooth and sustainable.

Development status of capital mobilization channels

In Vietnam, there are three main channels of capital for businesses, often likened to three tripods: bank credit, stocks and bonds.

According to the Ministry of Finance, by the end of 2021, the size of the credit channel, ie bank loans, accounts for about 124% of GDP, the stock market is nearly 94% of GDP. The bond market is close to 40% of GDP, including government bonds. In which, corporate bonds alone account for 14.2% of GDP.

Compared with some countries in the region, the share of corporate bonds in Vietnam is still quite modest, as in Thailand, corporate bonds account for 25% of GDP, Singapore 38% and Malaysia 56%.

Looking back at this tripod, bank credit mainly mobilizes short-term capital from people’s deposits, but is being used for many medium and long-term loans. Meanwhile, medium and long-term capital channels such as stocks and bonds have not yet brought into full play their potential.

Strict control of rumors in the stock market

In addition to detecting and handling cases related to some individuals who have manipulated the stock market, illegally issued shares…, other agencies, ministries and branches such as the Ministry of Information and Media and the Ministry of Public Security also got involved. The Ministry of Public Security has decided to prosecute the accused, arresting and detaining a number of people who spread false rumors that adversely affect the market. This is also a content that needs attention at this time, because the spread of false rumors has confused public opinion and reduced investor confidence.

On April 15, the Investigative Security Agency of the Ministry of Public Security has just prosecuted the case, prosecuted the accused and executed a detention order for Dang Nhu Quynh to investigate the act of “abusing the freedom of democracy infringes upon the interests of the State”.

The initial investigation results showed that Dang Nhu Quynh used social networks to post unverified articles and information. This has caused the capitalization of the Ho Chi Minh Stock Exchange to lose more than 265,000 billion dong in just 3 days from 6 to 8 April 2022. The Ministry of Public Security affirmed that in the coming time, it will continue to review acts that show signs of affecting the financial and securities markets.

“The Ministry of Public Security has been directing the Public Security of units and localities to focus on reviewing, detecting and affirming that all social media accounts, all acts of unverified reporting on cyberspace are are being reviewed by the police force; resolutely handle according to the provisions of the administrative and criminal law, those who conduct unverified reporting, negatively affecting legitimate and legitimate interests. laws of organizations and individuals, to socio-economic development, business investment environment”, said Lieutenant General To An Xo, Chief of Office, Ministry of Public Security.

A representative of the Ministry of Information and Communications said that comments and shares on social networks related to activities such as arrest and handling of individuals and businesses are baseless, causing adverse impacts on public opinion. , affecting investor sentiment will also be dealt with severely.

“This negatively affects domestic investors, foreign investors, domestic enterprises and it very seriously affects the stability of the country’s economy. We have coordinated to integrate polarized with the functional forces and asked cross-border platforms to immediately remove such false information”, said Mr. Luu Dinh Phuc, Director of the Department of Broadcasting and Electronic Information, Ministry of Information and Communications. Media, said.

The authorities also recommend that investors should be alert, not affected by false and unverified rumors, and closely monitor information from official sources.

Some recent violations related to securities and corporate bond transactions are not representative of the entire market. The timely handling of such violations is aimed at developing a safe capital market and ensuring the legitimate interests of investors. Strict sanctions will increase investors’ confidence in the market, especially foreign investors.

In the past 5 years, the corporate bond market has become a capital channel chosen by many businesses to create resources to expand their production and business activities. Currently, this capital channel has accounted for 14.2% of GDP, an increase of nearly 3 times compared to the figure of 4.93% of GDP in 2017.

The government aims to increase the size of the corporate bond market, accounting for 20% of GDP in 2025. Even at this rate of development, there is still great room to expand this capital channel.

Status of the corporate bond market

In the past 3 years, the average issuance volume of corporate bonds has been 467,000 billion VND/year, especially in 2021, the issuance will be up to 630,000 billion VND.

Despite the increasing volume and value of issuance, the proportion of corporate bonds issued to the public still accounts for a modest proportion, only about 8%, the remaining 92% are still bonds issued by private placement.

A product that all investors can participate in, the ratio is limited. A product that only professional investors can participate in is accounting for an outstanding proportion.

In Vietnam, there are three main channels of capital for businesses, often likened to three tripods: bank credit, stocks and bonds. (Illustration)

Non-specialists “turn” into professionals to invest in corporate bonds. Some units selling bonds are ready to “draw” many ways to circumvent regulations.

“If you make a professional investor certificate, it will cost you 5 million. We will do that for you,” the bond consultant said.

According to regulations, professional investors must have at least 2 billion VND of capital in a trading account. Some securities companies have circumvented the law by only requiring people to open accounts with money, while securities companies will stand to trade for customers with enough 2 billion dong to be eligible for certification. Fees range from 2.5 to 8 million VND depending on the location.

And if you don’t want to pay fees, people can still buy bonds, by hiding in the shadow of a professional investor.

Seminar “Development of a safe, transparent and sustainable capital market” broadcast on May 1, with the participation of Mr. Tran Xuan Ha, Deputy Minister of Finance; GS. Dr. Hoang Van Cuong, Vice Rector of National Economics University, Member of the National Assembly; Mr. Phan Duc Hieu, Standing Member of the Economic Committee of the National Assembly, will discuss practical solutions towards the goal of helping the capital market to open up and create momentum for the economy. Please watch the video above!

* Invite readers to watch programs broadcast by Vietnam Television on TV Online and VTVGo!