HOSE CEO Le Hai Tra: Without the stock market, it would be difficult to have billion-dollar businesses like today

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In order to maintain the role of capital mobilization of the market, Mr. Le Hai Tra said that it is necessary to fulfill the goal of upgrading the market, pay attention to the trend of sustainable investment as well as develop new services and products based on the foundations of modern technology.

Vietnam’s billion-dollar enterprises hardly exist without the stock market

According to statistics from the State Securities Commission after the first 6 months of the year, the total actual capital mobilization through stock issuance and equitization was estimated at VND 26,857 billion, up 197% over the same period last year. Market capitalization increased by 29.2% or 108.7% of GDP.

Along with the development of the stock market and the prospect of the recovery of the Vietnamese economy, a number of enterprises also plan to issue more shares to raise capital for business activities as well as provide services. In addition, the government’s move to reorganize divestments and IPOs of state-owned enterprises promises a boom and greater development of the market.

By the end of August, Vietnam had 37 billion-dollar enterprises, an increase of 9 companies compared to the end of June. This is proof that the stock market is promoting the role of medium and long-term capital mobilization. for the economy.

Mr. Le Hai Tra, General Director of Ho Chi Minh City Stock Exchange. (Source: HOSE).

In the Talkshow Financial Street recently broadcast by VTV8, Mr. Le Hai Tra, General Director of the Ho Chi Minh City Stock Exchange (HOSE) said that the explosive increase in liquidity in recent years is not part out of the general trend of the world. Particularly, the average liquidity of the Asia-Pacific region has increased by 50-70%.

Statistics at the beginning of 2020, the average trading value at HOSE is only approximately 4,000 billion VND/session. By June 2021, this figure has surpassed the threshold of VND 22,000 billion, an increase of 600% compared to the beginning of 2020 with many billion USD transactions even during the decline. This is a very fast growth in a very short period of time, which shows how interested investors are in the market.

The HOSE leader completely agreed with the view that billion-dollar businesses like today would hardly exist without the stock market.

“Without a market, the value of a business will only lie on the books. With the appearance of the market, that book value will be exchanged between investors. People will value it. With such sales, profits, growth rates, this business will be valued at many times the current profit of the company.”

In addition, another factor that contributes to the creation of billion-dollar institutions is investors’ expectations about the growth potential and ability to continue to generate profits in the future.

Not too worried about stock dilution

In fact, after announcing the plan to issue more shares, many businesses experienced a sell-off of their shares due to concerns about price dilution, resulting in a ten percent drop in share price (%) ) only for a short time.

Many opinions are concerned that, with the number of 147 listed companies expected to increase their capital size to nearly VND 102,600 billion through share issuance this year, the dilution pressure on the market is huge.

For experts, the dilution pressure depends on each business. If the business is good, with long-term prospects, this is a good opportunity to buy stocks for investors.

According to Mr. Tra, should not be too concerned about this, because different investment tastes will lead to different choices.

One of the basic tenets of businesses, especially in the early stages, is almost always prioritizing paying dividends in shares instead of cash for reinvestment. Many famous businesses in the world maintain the above policy for a long time such as Microsoft, or the empire of legendary investor Warren Buffet.

There are investors who are only interested in growth stocks, while others consider dividends as part of their annual earnings plan. Therefore, the essence of price dilution is just different investment choices of different groups of investors.

In addition to the goal of upgrading the market, it is necessary to pay attention to sustainable investment trends and diversify investment products

In the past 6 months, the Vietnam market has been one of the stock markets with the highest growth rate in the ASEAN region. For the first time, we surpassed the Philippines to rise to the 5th position in terms of market capitalization, and the 4th country with a capitalization-to-GDP ratio surpassing 100%.

Vietnam stands out as a market with low prices compared to the potential for profit growth in the 2021-2023 period compared to other stock markets in the region. (Source: VNDirect, Bloomberg).

Statistics in the ASEAN region, there are markets with a very high capitalization/GDP ratio, represented by the Singapore market with 195%. This is absolutely what we can aim for.

To help the market further promote the role of mobilizing medium and long-term capital for businesses as well as for the economy in the coming time, Mr. Tra has outlined three key solutions, the basic factors for Vietnam market in the current context.

One of the immediate goals is to upgrade from the frontier market to the group of emerging markets according to international organizations such as MSCI or FTSE Russel, thereby absorbing more investment capital.

Secondly, it is necessary to pay attention to the inevitable trend in the investment field in the world. It is investing in issues related to sustainable development, environmental issues or corporate governance factors. Vietnamese businesses need to understand and create a shift, to create favorable conditions to adapt to the requirements set out in order to receive and capture investment capital in the future.

The third but no less important content is the development of new services and products based on modern technology platforms, in order to attract more investment capital to the market.

Source: vietnambiz.vn – Translated by fintel.vn