An Effective Rasing Capital Chanel
Manh Chien VU, PhD
Vietnam University of Commerce
This research analyse about the facts, pros and con, reasons, opportunities and threats of the Vietnamese corporate market. According to this, it encourages the corporations to increase theirknowledge, change viewpoint and consider corporate market an effective raising capital channel beside borrowing from banks, share the level of risk from banking system to the bond market and balance the economy.
Key words: Vietnam, bond market
The process of equitization leads to the dramatically increasing number of joint stock companies, the stock market makes organizationsconcern about raising capital through the stock market. However, they only care about issuing share but ignore the bond market even though this is also an effective raising medium and long-term capital tool.
After the economy crisis in 1997 in Asia, many experts researched and found out the root cause and experiences from the crisis and studied to share the burden of risks from banks to corporatebond market. Then, this market needs to be developed to improve the supplying capital function. Alternatively, the most popular trend of developed countries is raising capital through issuing bond while in Vietnam, there are only a few corporations such as Vinashin, EVN, BIDV participate in this market. With most companies, especially the small and medium sized ones, this concept is still new. Themain reason is that the corporate market is not developed yet, the legal system is not completed, and there is low infrastructure and lack of the standard interest curve.
The Current Situation of Vietnam Finance Market
It could be said that, at the moment, Vietnam corporations have many chances to raise capital to run projects. The amount of investment break the record of estimated 20.3billion USD, 10.1 billion USD increasing compared to 2007 (10.2 billion USD) - 7 billion USD over planned. The new point in FDI 2008 was that the investment structure was transferring from industry to hospitality, housing, hotel, travelling, finance and banking...Investment in 2008 was estimated to be 5.1 billion USD - 1.2 billion USD increasing compared to 2007.
As well as increasing FDI, theamount of oversea national investment has been increasing. In 2008, this amount reached 5.5 billion USD compared to 4/7 billion USD in 2006 and equal to 157 times in 2001. The average rate of 37% per year of official oversea national investment from 1991 to 2008 was over 29.4% billion USD, equal to 70% FDI from 1998 and 1.5 times ODS from 1993. This amount has been invested in stock market, realestate, consumption and year-end festivals.
Figure 1: Foreign Direct Investment in Vietnam 2000-2008
(Source: Vietnam Economy Journal)
Table 1: The Scale of Vietnam Stock Market (up to October 2008)
| |TOTAL |HASTC |HOSE |Upcom |
|No of Quoted Securities|851 |286 |562 |3 |
|Percentage |100 |33.61 |66.04 |0.35 |
|Total Quantity Quoted (000, units) |7,504,376 |6,040,620 |1,392,346 |71,409 |
|Percentage|100 |80.5 |18.55 |0.95 |
|Total Value Quoted (million VND) |200,057,927 |60,406,208 |138,937,623 |714,095 |
|Percentage |100 |30.19 |69.45 |0.36...