Retail investors account for about 80% of Vietnam’s trading value, raising volatility concerns

Nguyễn Hoàng Yến, CEO of Mirae Asset Securities Vietnam Joint Stock Company, said retail investors still account for about 80% of trading value on Vietnam’s stock market. Some chase short-term price swings, rumors or crowd sentiment. She said that when investment decisions do not take company value and long-term goals into account, the market is more prone to excessive volatility.

Nguyễn Hoàng Yến, CEO of Mirae Asset Securities Vietnam Joint Stock Company.（VietVance）

She said investing through professional institutions has yet to become common practice. More than 700,000 investors in Vietnam hold fund units, while the number of securities accounts has exceeded 14 million. Assets managed by the fund management industry are equivalent to about 6% of Vietnam’s GDP, compared with more than 56% in Malaysia and 84% in South Korea. She said Vietnam has room to develop long-term and institutional investment.

Nguyễn Hoàng Yến also urged investors to manage risk, allocate assets sensibly and use leverage within their financial means. She said the VN-Index currently has a price-to-earnings ratio of about 11.5, corresponding to an earnings yield of 8.7%; the highest 12-month deposit interest rate is about 7%. In her view, this relationship between valuations and interest rates could help attract international investors interested in medium- and long-term opportunities.

On a potential market upgrade, she said Vietnam still needs to improve market quality. Steps include promoting initial public offerings and listings by large companies with sound finances and growth potential, standardizing disclosures in English, and accelerating the introduction of a central counterparty clearing mechanism to reduce settlement risk and the cost of accessing information for foreign institutional investors.

Source: VietVance