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New treatments set to boost capital market’s liquidity, officials say

In Uncategorized on December 16, 2010 at 10:09 am

Many regulations will be released to boost Vietnam’s bond market, which has a healthy growth rate and a low liquidity, officials said.

A woman watches share prices updated on a computer screen at a HCMC-based brokerage (Photo:Minh Tri)

Deputy financial minister Tran Xuan Ha said it was necessary to set up tax exemptions for bond trading and focus on boosting the market’s liquidity. The Ministry of Finance released regulations on issuing bonds with large amounts and buying back bonds to increase the debts’ liquidity.

The ministry also speeded up the equitization and submitted plans on gradual sales of the state-owned shares to the government.

Statistics shows that bonds worth VND100 trillion (US$5 billion), mainly treasury bonds, were issued this year. However, only commercial banks were the buyers. Economists said the bond market’s liquidity was very low in the last 10 years.

The Asian Development Bank said in its recent report that Vietnam’s corporation bond market grew fastest among other countries in the region in the third quarter of 2010.

Corporation bond’s growth rate this year rose 51.9 percent year-on-year, almost double of the government bond’s 25.5 percent. However, in the third quarter of the year, corporation bond’s issue value fell 68 percent year-on-year, while government bond’s issue value dropped 43.6 percent year-on-year.

Despite its fast growth rate, Vietnam’s bond market with $15 billion in unpaid bonds at the end of September remains small compared with other countries in the region. Of the amount, government bonds are worth $14 billion.

Recovering stock market
Both stock markets in Hanoi and Ho Chi Minh City roared back last week as the investor confidence was restored. The daily trading volume at the two bourse reached an average amount of more than VND2 trillion ($100 million).

Analysts said the increasing trading volume showed investors pumped more money into market. Some brokers warned the stock market was overheated as many shares rose by the daily trading band of 5 percent for many days.

The Hanoi-based brokerage FPT expected the market would make corrections, as investors would take profits from the current winning streak.

However, financial experts said the market is often bullish at yearend. Foreign investors continued to be sellers recently, but they dumped penny shares only to restructure their portfolio, experts noticed.

Source: SGGP

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