How to manage capital flow from bonds “poured” into the real estate market?
According to a report by the State Bank of Vietnam, as of March 31, 2022, the outstanding credit balance for real estate business reached 783,942 billion.
FDI capital, by the end of April 2022, the total newly registered capital in real estate reached nearly 2.8 billion USD (accounting for 26.5%), ranked second, capital contribution and share purchase alone reached 1.04 billion USD. USD (accounting for 9.69%).
Issuing bonds by the end of April 2022, the whole market issued 72,000 billion dong, of which real estate enterprises issued 27,000 billion dong, ranked first (accounting for 37.3%), second was the group of financial institutions. finance (31.6%), construction 17% (according to HNX, SSC).
Capital flow for real estate businesses is narrowing
Sharing with the press recently, Dr. Hoang Van Cuong, Member of the National Assembly, Member of the Finance and Budget Committee of the National Assembly, Vice Rector of the National Economics University, said that in the financial market there are many channels, but these channels are narrow. gradually for real estate businesses.
In the traditional channel is bank credit capital, not only real estate enterprises but all enterprises in general of the economy must mobilize capital mainly based on the banking system. Because the development of the banking system has existed for a long time, and people are more used to depositing money in banks than other channels.
However, residents’ deposits in banks are mostly short-term. This is in contrast to the long-term capital needs of real estate businesses.
“Banks have a principle, in order to ensure liquidity and avoid chain breakdown, they can only use a certain percentage of short-term capital for medium and long-term loans. This ratio is increasingly lowered by the State Bank. Therefore, it is increasingly difficult for banks to finance real estate projects,” said Mr. Cuong.
Similar developments are appearing in other channels in the capital market such as securities and corporate bonds. Specifically, in the past, these were places that very well converted short-term capital into long-term capital. People with spare money for a few weeks can also buy stocks, then sell them, other people with idle money will buy them. Thus, the volume of shares issued has become the long-term value.
“Through the stock market and corporate bond market, people’s short-term investment money will become long-term money. Real estate businesses have taken advantage of mobilizing capital in these two markets to make up for the shortfall in credit flows, “said Mr. Cuong.
In fact, the stock market and corporate bonds have grown strongly and gradually become an effective capital channel for real estate businesses.
However, according to Mr. Cuong, in the recent period, there have been some unhealthy phenomena in the capital market. Typically, the stock market has the phenomenon of price blowing, making stock prices. As for the bond market, there is a hot growth, the issuers do not use the capital for the right purposes.
“Due to these developments, the management agency was forced to take a series of drastic actions like the past. Even within a year, the Ministry of Finance has issued 5 draft amendments to Decree 153 five times, but even the most recent version, it is still considered a very tight approach, “said Mr. Cuong. .
Difficult to manage bonds in the direction of capital use
Giving his opinion on the capital flow story for the real estate market, Dr. Le Xuan Nghia, Member of the National Financial – Monetary Policy Advisory Council at the seminar Opening capital flow for Vietnam’s real estate market. Mr. Nghia said that the Government is currently proposing to manage bonds in the direction of capital use.
“I think it is necessary to have specific recommendations and suggestions on this issue because this is very difficult to manage,” emphasized Mr. Nghia.
According to Mr. Nghia, about the story of secured assets of businesses. Currently, companies put their assets to be secured as collateral for loans. But in reality, there is no tool to confirm and ensure that these collaterals are true to what the business says… And since then we cannot manage the fact that businesses go to secure assets. to borrow money or issue bonds.
Regarding the private placement of bonds, in the past, the private placement of bonds was not managed by the State Securities Commission.
Dr. Le Xuan Nghia spoke at the conference. (Photo: Realtimes)
“In my opinion, this is natural. However, the problem is that we still need to manage and how should we respond? The current method is that the State requires enterprises to make financial statements. This is also unreasonable for both issuing and non-issuing companies,” Nghia said.
According to him, individual bonds are for professional investors. And so, a lot of people want to become professional investors. This is normal and nothing to worry about, since people like to take risks and take risks, let them do it.
In the draft amending Decree 153, the rating of enterprises is recorded as “rating if any”. Thus, our State is ignoring the rating, while the issue of individual bonds, the rating of enterprises is very important. And this in countries around the world is also very important.
Regarding the story, the bank’s medium and long-term capital is only equal to the bond capital of enterprises currently on the market with a level of over 20%. Talking to see the bond market is very important to the real estate in particular and the market in general.
We must find a way, emphasize the credit rating. There must be solutions to speed up the credit rating quality of real estate businesses.
“Finally, in my opinion, tax tools should be quickly used to prevent real estate speculation. At first, the tax rate may be small, but gradually in the future it can be increased so that people are aware of the role. of the land, avoiding the situation of embracing abandoned land,” Nghia said.
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