Stock and bond markets are gradually recovering.

Stocks that trade in the billions of USD.

At the close of trading at the end of August, stock indices rose across the board. Specifically, the VN-Index increased by 10.89 points to 1,224.05 points; the HNX-Index increased by 1.79 points to 249.75 points; and the UPCoM index also rose by 0.64 points to 93.32 points. The significant increase before the long September 2nd holiday was a positive sign for the stock market, especially with trading volume and value also increasing compared to the previous session. Specifically, the total trading value reached over 24,000 billion VND, equivalent to approximately 1 billion USD.

Overall in August, the VN-Index only increased slightly by nearly 2 points. However, compared to the low point after the unexpected plunge on August 18th when the VN-Index lost more than 55 points in a single session, the index has recovered and increased by nearly 4% in just two weeks. In total, after 8 months, the VN-Index has increased by 21.5% and the HNX-Index has also increased by 21.6%. The market's trading value has tripled and maintained a level of billions of USD in trading volume per session, or even reaching 1.2 billion USD.

Stock trading has become active again in recent months.

Several factors are positively influencing investors to turn to the stock market. These include continuously falling bank deposit interest rates, positive signs in the macroeconomic environment (although not yet strong), and the government's continued push for stronger disbursement of public investment funds. Furthermore, among traditional investment channels, only the stock market is currently easier to trade. This is because the real estate market remains relatively sluggish; and the price of gold is no longer very attractive to many, especially young investors.

According to Mr. Nguyen Nhat Khanh, Head of Investment Consulting at Mirae Asset Securities Company, deposit interest rates have started to decrease since the end of March. As a result, many depositors are reluctant to leave their money in banks when it matures because interest rates have fallen too low, and they want to seek higher-yielding investment channels. Furthermore, a series of government policies have been implemented, such as removing legal obstacles for real estate projects; reducing value-added tax, and lowering fees… to support businesses and stimulate consumer demand. Overall, monetary and fiscal policies aimed at supporting economic development have begun to have an impact on many sectors.

Monetary policy needs to be applied "correctly" and cautiously to avoid a strong influx of cheap capital into speculative activities, which would only lead to a short-term recovery in the stock market.

Dr. Nguyen Huu Huan (University of Economics Ho Chi Minh City)

"The stock market is a market of expectations. When investors see the objectives of policy, especially lower interest rates, helping many businesses operate more smoothly, they will start buying stocks beforehand without waiting for actual business results. For example, real estate stocks have recently surged and contributed positively to the recovery of the stock market in general, even though the business results of many companies still need more time to recover," Mr. Nguyen Nhat Khanh further shared.

Problem and Solution: Solutions for restoring the corporate bond market.

The bond market is starting to move.

While the stock market has recovered strongly since the beginning of Q2 2023, the bond market is also showing signs of thawing. It is estimated that in August, there were 18 successful corporate bond issuances with a total issuance of over VND 21,500 billion, a 70% increase compared to July. Of these, banks accounted for over 50%, withACB successfully raising VND 6,500 billion; OCB issuing VND 2,000 billion, and MSB issuing VND 1,000 billion. Simultaneously, many real estate companies have also increased their bond issuances again.

However, according to data from the Ministry of Finance, from the beginning of the year to the end of July, 36 enterprises issued private corporate bonds worth VND 62,300 billion, a decrease of 77.8% compared to the same period in 2022. These issuances brought the outstanding balance of private corporate bonds to VND 1.02 million billion (as of July 28), equivalent to 10.8% of GDP in 2022 and 8.2% of the total outstanding credit of the economy. Explaining the above results, the agency said that the volatile market context led many enterprises to proactively repurchase bonds before maturity to restructure their capital sources, with the volume of early repurchases reaching VND 135,300 billion, an increase of 56.3% compared to the same period in 2022.

If the Q3 2023 business results of many companies are better, foreign investment inflows into Vietnam continue to grow, and public investment disbursement proceeds according to plan, the stock market will be more positive and this trend will extend into Q1 2024. This will make it easier for companies planning to raise capital through shares to do so when trading is more active. However, the corporate bond market still needs more time because many issuers are still facing difficulties in repaying principal or interest on bonds, causing investors to remain hesitant.

Mr. Nguyen Nhat Khanh, Head of Investment Consulting Department, Mirae Asset Securities Company

Dr. Nguyen Huu Huan (Ho Chi Minh City University of Economics) believes that the stock market recovery is mainly due to the influx of "cheap" money as interest rates continue to fall. Many investors also expect that policies to promote economic development will lead to recovery, and the business activities of many companies are gradually improving. As a result, capital quickly flows into the stock market because it is easy to buy, sell, and has high profit potential. This will be more positive and will consequently spread to companies raising capital through the stock market. Typically, after a stock market increase, it will also stimulate the real estate market. Currently, the real estate market is also beginning to show signs of recovery. However, Dr. Huan also believes that monetary policy needs to be applied "correctly" and cautiously to avoid a strong influx of cheap capital into speculative activities, which would only lead to a short-term recovery in the stock market.

Regarding the bond market specifically, Dr. Huan assessed that the market is experiencing a crisis of confidence and therefore cannot recover as quickly as the stock market. The number of businesses successfully raising capital through bonds remains quite small. Therefore, the government still needs to consider more solutions. These include continuing to address internal issues and implementing policies to encourage investor participation in the market. In reality, the risk level of the corporate bond market in Vietnam is even higher than that of stocks, although the opposite is true in other countries. Therefore, solutions are needed to restore investor confidence, such as establishing a bond capital insurance market in line with international practices.

Source: https://thanhnien.vn/thi-truong-co-phieu-trai-phieu-dan-hoi-phuc-185230901232748574.htm