BizLIVE talked with Mr. Do Ngoc Quynh, CEO of VNDIRECT about the position of the stock market in the long-term asset trend of Vietnamese investors, on the occasion of the 20th anniversary of the establishment of the Ho Chi Minh Stock Exchange (HOSE).
Many investors believe that the securities industry has not developed in line with other economic sectors in the past 20 years. How do you evaluate this view?
Assessing the 20 years of market development, contrary to the above view, I think that the securities industry has developed very strongly.
Before 2000, Vietnam did not have a securities company (securities company) nor a stock exchange (stock exchange), but now there are more than 70 securities companies. Among 2.4 million accounts of the whole market, VND has more than 400,000 accounts and is the number one securities company in the market. The capital size of VND has increased nearly 60 times.
The size of the securities industry has increased sharply, particularly the stock is more than 70% of GDP, the bond is more than 40% of GDP. The stock market did not stand still.
However, stock prices of securities companies are not volatile like real estate companies and producers. It is a taste of risk appetite, pricing, ways of providing information of Vietnam’s stock market alone. At present, investing in securities companies is like asset.
In the coming time, I want the management agencies to improve the quality of goods, to add goods, to enhance inspection and to improve corporate governance standards.
In particular, the restructuring of securities companies will create competition on quality. There are too many securities companies competing at price.
With a strong investment in technology, dumping affects profits. The introduction of capital, technical and human standards will help reduce competition pressure.
At the recent Annual General Meeting of VNDIRECT, the Board of Directors emphasized the trend of becoming a leading asset management institution. Please tell me the difference between a broker and an asset manager. Why is this the trend of the stock market in the future?
Savings to buy real estate are often two alternatives to gold in recent times, when interest rates are quite high and real estate prices are pushed up for a long time.
As the interest rate environment declines and will continue to decline in the near future, the choice of investing in the stock channels of businesses with solid operating background and steady profit growth is an impossible option.
Currently, the stock market after 20 years of operation has created a level and transparent playing field for investors participating in stock trading to seek short-term business opportunities. However, the understanding of individual investors and the ability to access the stock investment market are very limited to a large number of investors in the market.
Securities are not an asset channel for investors to choose long-term assets because it requires the basic knowledge and the management process of assets after investment.
As a leading securities company in terms of number of trading accounts of individual investors, during the 14 years of development of VNDIRECT, we realize that due to the country’s unique historical development background, The majority of Vietnamese people currently do not have knowledge of investment finance and do not know how to create a productive investment path with better financial investment tools in the capital market.
It also makes it difficult for Vietnamese enterprises to raise capital in the stock market and in many cases, they have to sell themselves to foreign partners soon. The stock market has not yet become a channel to channel capital for businesses and create a long-term investment channel for individual investors.
The stock market needs to diversify the participants. We need a group of individual clients with trading experience to create liquidity for the market, but we also need long-term investors to be ready to join when the short-term cash flow is withdrawn from the market.
The great achievements in economic development of the country during more than 20 years of opening and international economic integration have created opportunities for Vietnamese people to accumulate income and gradually form a central part. When people have savings, there will arise investment needs in particular and personal financial management in general.
In addition to stocks, investors can now choose ETFs, corporate bonds, and government bonds. Does Vietnam’s stock market have enough products to diversify for asset management? In your opinion, what products do the market need in the future?
We believe that Vietnam’s stock market has been developing for 20 years and gradually adding more investment products and instruments for different maturities. In recent years, new investors have gradually become acquainted with choosing bond investment instead of saving with fixed interest rates. The market has gradually become aware of an additional ETF portfolio for long-term investment saving options in addition to individual equity investments.
However, each type of investment has different characteristics of risks and investment time which requires investors to have knowledge to choose appropriately.
Finally, what would you like to say to HOSE on the Department’s 20th birthday?
On the occasion of the 20th birthday of HOSE, I would like to send my sincere gratitude and congratulations to the leaders and employees of HOSE for the great achievements.
I wish all of the current HOSE’s people to be healthy, intelligent, brave and united to continue building HOSE to reach new heights to best meet the socio-economic development requirements of country!
Thank you for this interview.
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