Vietnam to Develop Capital Market to 15% GDP in 2010

The Vietnamese government has set a target to raise the size of its capital market to 15% of the country’s gross domestic products (GDP) in 2010 and up to 70% by 2020 to provide sufficient capital for the post-crisis economy, said Nguyen Ngoc Anh from the Ministry of Finance.

 

Developing local bond market will help stably mobilize mid- and long-term capital, Anh said at the Vietnam Finance and Capital Markets Conference in Hanoi on November 30.

 

Do Ngoc Quynh from the Vietnam Bond Market Association said during the global economic crisis, foreign investors withdraw capital from the nation’s capital markets, which reduced bond liquidity, while g-bond auctions were unsuccessful.

 

With more than 500 types of g-bonds at different coupons, only commercial banks are investing in bonds in the secondary market.

 

Under the support of the International Financial Corporation, a dedicated bond market under the management of the Hanoi Stock Exchange was formed to increase the market liquidity and transparency.

 

“We are now reviewing all activities of the market to further increase transparency to lure more foreign capital into the country,” Anh said.

 

Vietnam is completing the legal framework and upgrade depositary system to allow issuing bonds in big lots and developing derivative products.

 

In other discussions during the conference, Dragon Capital Group co-founder Dominic Scriven said the recent moves of the State Bank of Vietnam on prime interest rate and foreign exchange policies were the right thing to solidify investor confidence in the banking system.

 

Director of Asia Development Bank in Vietnam Ayumi Konishi proposed Vietnam should maintain its economic growth at between 6% and 6.5% in 2010 to control new inflation, and economic reform is needed to keep this sustainable growth.  (Local sources)