Speaking to Customs Newspaper about the prospects of the securities market in the context of political conflicts and the complicated pandemic situation, Truong Hien Phuong, Senior Director of KIS Vietnam Securities Corporation pointed out the key factors in attracting foreign capital and developing a sustainable securities market in the near future.

Truong Hien Phuong, Senior Director of KIS Vietnam Securities Corporation 

Political conflicts between big countries together with the complex developments of the Covid-19 pandemic have dominated the securities market. How do you comment on opportunities ofthe securities market in the near future?

- I think in the medium and long term, the securities market will soon develop again, because in any market, the securities market, the gold market or the commodity market move in a sinusoidal pattern. With information that has not been so good in recent years, there have been some market corrections. However, this is an opportunity for investors who are holding cash. Currently, foreign investors are operating actively. According to statistics, Exchange Traded Funds (ETF), including newly established domestic ETFs, have recently attracted a lot of foreign capital. This is great support for the market.

Meanwhile, domestic investors participated less actively than in March, April and May due to the attraction of the gold market. The recent sharp increase in gold price attracted many trade investors to switch money from securities to gold for speculation. However, in the medium and long term, the uptrend of gold prices will soon stop or only increase moderately and gold will no longer be an attractive investment channel because the price has increased too much and has shown signs of becoming a bubble. Investors will be cautious and not dare recklessly invest in gold, but will start selling to take profits. At that time, one of the main channels attracting this cash flow will be securities. Therefore, I believe domestic cash flow will soon return to the securities market.

What are the options in the current period for investors?

- When investing in any product, investors need to choose the appropriate time at a reasonable price range and this period is the right time for securities investors because the market has gone through many downward corrections. A number of shares decreased more strongly than the decrease of the score due to the overreactions of investors, so they have very attractive prices. Previously, the PE of the whole market fluctuated at 14-17x, but it fell to 10-12x - an attractive level. The valuations of the shares as well as of enterprises have attracted financial investors, especially professional investors. Therefore, individual investors should take advantage of this opportunity to buy securities at low prices for medium and long investment.

In addition to the price factor, another factor that can become the belief and a basis for investors to return to the securities market is the countries’ ability to overcome the disease in the coming period. Along with that, the most difficult period of the pandemic in March, April and May has also reflected a lot in the business results of enterprises. But most enterprises have had solutions to overcome the pandemic, so they did not suffer losses much, some enterprises also made profits, even exceeding the plan compared to the same period last year. Investors should put their faith in the market and enterprises. Because after a period of suppression, when the pandemic is controlled, economies will be more open and trade between countries resumes, enterprises will operate strongly again and bring goods results in the year-end period. Therefore, current investment is an investment in future potential and this is an opportunity for investors to buy securities or choose enterprises with reasonable prices and profits in the year-end period.

In addition to the above factors, what solutions should the State introduce to support the market in the near future?

- Vietnam's securities market has gone through 20 years of development. The Government and management agencies have shown great determination in supporting the economy, including the securities market. In particular, the Ministry of Finance, the State Securities Commission and the Stock Exchanges are determined to create transparency by dealing with violations and disclosing information on the market in a transparent and clear way. The chairman of the State Securities Commission also set the target to upgrade the market as the focus in the near future. With such determination, I believe the securities market will be more and more transparent and efficient.

However, management agencies may consider more about a larger room for foreign investors because this is also a way to attract more attention from large investors in the world or large corporations that have a need to invest in Vietnamese enterprises through the securities market. The expansion of investment by large foreign investors and large corporations in Vietnam will create a foundation for domestic investors to feel more secure and boldly disburse more. It is possible to boldly allow the application of certificates without voting rights in enterprises that have run out of room.

In addition, the equitisation of State-owned enterprises also needs to be more drastic to create more abundant goods for investors, especially attracting large cash flows from foreign investors. When there are goods to meet demand, not only domestic investors but also foreign investors and investment funds will disburse more strongly.

Moreover, to create more favourable conditions for investors to participate in trading, the securities sector needs to shorten the payment time to T + 0 instead of T + 2. This will help investors sell shares within the session instead of holding them for several days. This is also a problem for Vietnam's securities market to be upgraded to an emerging market.