Latest articles

MoF works with corporate bond issuers and securities companies

Seeking solutions to help the stock market recover

The meeting was attended by Deputy Minister of Finance Nguyen Duc Chi, leaders of the State Securities Commission, the Department of Banking and Financial Institutions, the Vietnam Stock Exchange, and the Hanoi Stock Exchange.

Speaking at the meeting, Minister of Finance Ho Duc Phoc said that the stock market has just experienced a sharp decline, especially corporate bonds, investors' confidence in bonds, and the stock has gone down.

"We have made many efforts to build a capital market to serve the country's economy's development effectively. However, in 2022, the case of Tan Hoang Minh, FLC, or An Dong company and SCB bank caused the market to wobble," said the Minister.

According to the Minister, the Government has issued stimulus packages to solve difficulties and improve businesses' resilience. However, the businesses have faced many difficulties and seen serious production and capacity decline. Macroeconomic indicators have been growing well, but if there are no solutions to promote the market, especially to promote production and business, it will be very difficult in the future.

The meeting

The Minister said that the stock market is an " economic thermometer ". However, the stock market has recently declined, and the VN-Index has decreased by 38% compared to the beginning of 2022. Meanwhile, monetary and credit markets have shown complicated movements, interest rates have constantly been increasing, and credits have been tightened; the real estate market is now facing the risk of bursting a bubble after a period of hot growth due to a lack of capital, as well as a decline in confidence in this market.

Regarding corporate bonds, Minister Ho Duc Phoc affirmed that corporate bonds are an important medium and long-term capital market tool for businesses and the economy. However, as of September 30, 2022, the whole market has VND1,260 million billion, equal to nearly 10% of the outstanding loans of commercial banks.

Recently, several businesses have violated the bond issuance law and been taken to court, causing panic, and leading to investors rushing to withdraw money, causing difficulties for enterprises in capital borrowing.

Therefore, the Minister expects to work with securities companies and bond issuers to seek solutions to help the market return to normal and continue to develop, as well as to strengthen confidence in the bond market and improve liquidity.

It is necessary to have comprehensive solutions

At the meeting, securities companies and bond issuers raised many opinions to remove difficulties for the stock and the corporate bonds markets

They all said that the most important thing now is to expand the bank credit room and maintain liquidity so that businesses have circulating capital; bond issuers must seriously comply with their commitments to investors; state management agencies must quickly handle legal documents for projects, especially real estate projects to sell products on the market soon to recover capital for repayment of bond debts on time.

According to Mr Nguyen Vu Long, General Director of VNDIRECT, the biggest problem for the bond market today is the liquidity capital flow of enterprises.

Currently, the capital mobilization channels of enterprises are stuck. Banks have run out of credit room from the middle of the second quarter to the beginning of the third quarter of 2022, and other capital mobilization channels, such as the stock market, have been very difficult. Meanwhile, in the bond channel, almost no businesses could raise new bonds in the fourth quarter of 2022,

In the short term, it is necessary to maintain liquidity so businesses can have circulating capital to continue their operations. The timely liquidity now comes from bank credit, but banks have run out of room.

"Investors' confidence in the market is very important. Some recent events have seriously affected investors' confidence, so it is necessary to regain their confidence in the capital market. Investors need to know that these are just " One scabby sheep is enough to spoil the whole flock ", are a part of the market, but a picture of the entire corporate bond market, "said M. Nguyen Vu Long.

Ms Tran Thi Thu Trang, Deputy General Director of Saigon - Hanoi Securities Joint Stock Company, said businesses are stuck in raising capital in the market. While the maturity of bonds shortly also puts pressure on businesses as they cannot find the capital to repay or restructure their debts.

Ms Trang expressed her desire to increase the ability of enterprises to raise capital in the market, focusing on public issuance, which is the power of capital from the people and has a strict legal appraisal process, helping increase investors' confidence.

"To encourage businesses to focus on this capital channel, state agencies should review procedures to create favourable conditions for businesses to conduct public offerings more," Ms Trang said.

Mr Le Quoc Binh, General Director of Ho Chi Minh City Technical Infrastructure Investment Joint Stock Company, said that what businesses expect is not financial support but the handling of legal documents for projects, especially real estate projects, so that investors in real estate projects, can put their products on the market early to recover capital pay debt bonds to investors on time.

"Enterprises must always determine that the performance of bond debt obligations to investors is a particularly important thing to keep the business's credibility in the market," Mr Binh affirmed.

Also at the meeting, the market participants, securities companies, businesses, and bond associations pointed out the difficulties and problems related to the financial and monetary market, liquidity, and legal difficulties.

Accordingly, the MoF will summarize and work with relevant ministries and agencies to report to the Government and the Prime Minister for immediate and long-term solutions to raise the confidence in the market, helping the market continue to develop sustainably.