It is necessary to overcome limitations in the market and further improve the quality of the capital market. Photo: Internet

The capital market is increasingly balanced and harmonious

The capital market is an important component of the financial market that provides medium-and long-term capital, contributing to effectively mobilizing and allocating resources and creating an essential material foundation for the grow of national economy. In the new context, the capital market is a driving force to promote innovation, sustainable development, and enhance the country's position in the international arena.

The Party and the State have made efforts to develop the capital market. Accordingly, Resolution No. 39-NQ/TW dated January 15, 2019 of the Politburo on improving the efficiency of management, exploitation, use and promotion of economic resources clearly regulates that “… focus on developing the domestic capital market towards diversifying debt instruments and investors, attracting foreign investors”. In addition, Resolution No. 31/2021/QH15 has set ambitious goals for the capital market with the orientation by 2025, the capitalization scale of the stock market will reach at least 85% of GDP, the outstanding debt of the bond market will record at least 47% of GDP, of which the outstanding debt of the corporate bond market will achieve about 20% of GDP....

According to Dr. Le Minh Nghia, Chairman of the Vietnam Financial Consulting Association (VFCA), despite facing many unpredictable events, the Vietnamese capital market has shifted towards becoming more balanced, harmonious and sustainable. Accordingly, the capital market has gradually reduced its dependence on credit capital sources, increasing the proportion of capital mobilized from the stock market.

By the end of June 2024, the stock market capitalization had reached more than VND7,066 trillion, equivalent to 69.1% of the estimated GDP in 2023. The number of investors' securities accounts continued to grow, reaching more than 8.6 million accounts. On November 29, 2024, the National Assembly approved the Law amending and supplementing laws in the financial sector, including the Securities Law, creating an important step forward, promoting the development of the capital market.

Economic expert Dinh Trong Thinh said that the Vietnamese stock market is developing strongly. By the end of August 2024, the stock market capitalization reached 280 billion USD, an increase of 19.1% compared to the end of 2023, equivalent to 69% of the estimated GDP in 2023. From the beginning of 2024 to now, the average transaction value gained about US$1 billion, an increase of 31.3% compared to the average of the previous year. The market has 728 listed stocks and 878 stocks on UPCoM with a total listed value of VND2,246 trillion, up 5.5% compared to the end of 2023. Foreign investors hold about US$50 billion worth of stocks, equivalent to more than 17% of the market capitalization.

For the corporate bond market, production and business in 2024 saw good growth, creating a premise for the economy to grow further in 2025. The increasing trend of stocks on the stock market is a good premise for many enterprises to issue bonds both in the listed bond market and in the private bond market.

Overcoming limitations, further improving the quality of goods

The capital market has gone through a difficult time and has showed signs of improvement, Phung Quoc Hien, former Vice Chairman of the National Assembly, said that in recent times, the stock market has developed in both scale and quality. The scale of capitalization and the number of accounts participating in the market have both increased over the past year. The bond market has developed in terms of issuance volume, and interest rates have decreased.

Commenting on the market prospects, Hien said that in 2025, with the implementation of large public investment projects such as Long Thanh airport, expressways, etc., a large amount of public investment capital will be poured into the economy. Therefore, more government bonds will be issued, and the bond market will also develop, etc. These factors will promote positive changes in the capital market in 2025.

However, besides the impressive development in recent times, the Vietnamese capital market still has many potential challenges that need to be resolved. According to the representative of the Vietnam Financial Consulting Association, the corporate bond structure is still unsustainable, mainly issued by the banking and real estate groups. The stock market is the most volatile in the region, still far from the set targets in both quality and quantity, while the insurance market in the past two years has recorded the lowest growth rate.

In the banking credit market, bad debt pressure is increasing while the reserve buffers of many banks are thinning, showing potential risk factors. The size of the capital market is still quite small compared to other countries in the region; products are few and not diverse; transparency and professionalism are not high, sanctions are not strong enough; limitations in technology infrastructure, domestic and foreign investors' confidence in the capital market has not really recovered, and the investor base is not sustainable...

According to experts, in order for the capital market to develop commensurate with its role, it is necessary to overcome the limitations by further improving the quality of products on the stock market, including goods on the stock and bond markets, thereby boosting investors' confidence and attracting domestic and foreign investment in economic development. At the same time, there should provide incentive policies for green, social, and sustainable bonds, while allowing financial institutions to participate more deeply in the corporate bond market based on a risk-based investment management framework. Additionally, it is necessary to promote the process of upgrading the stock market to enhance the position of the Vietnamese capital market in the international arena, thereby attracting large amounts of high-quality capital from reputable foreign investors.