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Stocks

Vietnam bourse to launch derivatives market

Adding more products to attract institutional investors

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A woman rides a bicycle past the stock exchange in Hanoi.   © Reuters

HO CHI MINH CITY -- The Hanoi Stock Exchange plans to open a derivatives market next month, aiming to boost investment in Vietnam's capital markets.

The first derivatives products on the new market will be futures contracts for the VN30 Index, which tracks the performance of the 30 largest companies by market capitalization on the Ho Chi Minh City Stock Exchange.

The Hanoi bourse aims to attract institutional investors to the new market, Nguyen Thi Hoang Lan, vice general director, told reporters. Demand for futures contracts for the VN30 Index is high, she said.

Vietnam's securities market authorities said that all preparatory activities have been completed, and that now is the right time to launch derivatives as the country's 17-year-old stock market is stable.

Six securities companies -- HCM City Securities, Saigon Securities, VietCapital Securities, BIDV Securities, VNDIRECT and VPBank Securities -- had been approved as authorized traders on the market as of June.

Brokerages from Japan and South Korea have shown an interest in the market's products.

Government bond futures and other products will likely be added to the lineup soon.

The Hanoi bourse has worked with Saigon Securities for two years developing the derivatives market, which was initially planned to launch in 2016.

Nguyen Duy Linh, a director at Saigon Securities, said at a seminar in Ho Chi Minh City last week that derivatives products could help investors predict the future movement of securities and turn profits on their invested assets.

Other countries in Southeast Asia, including Singapore, Thailand, Indonesia and Malaysia, already offer derivatives products on local stock markets.

Last month, MSCI, a U.S. investment research firm, declined to place Vietnam on its watch list for emerging-market status, pointing out inhibitors such as conditions on foreign ownership, including individual and market-wide ownership limits.

Vietnam's stock market authorities have been urged to shore up investor confidence and upgrade Vietnam's stock market by the next review in 2018. Providing more products to the market, increasing foreign ownership limits, equalizing state-owned enterprises, and restructuring banks are likely the main items on the agenda.

Statistics from Saigon Securities showed Vietnam's stock market performed well during the first half of 2017, with the VN Index rising 16.8% to 776.47 and the Hanoi Stock Exchange Index advancing 23.7% to 99.14.

Foreign investment returned to a net surplus of over 9.04 trillion dong ($397 million) in the January-June period, compared with a net deficit of 6.76 trillion dong last year.

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