The move is aimed at diversifying products on offer and boosting market liquidity.
The Hanoi Stock Exchange (HNX) is on the brink of a significant change in its operations, as it explores the introduction of single stock derivatives and other derivative products derived from indexes. This move aims not only to diversify the financial products available to investors but also to enhance liquidity in the marketplace, making it more resilient and attractive for both domestic and international participants.
| The Hanoi Stock Exchange. File photo |
In its latest report, the HNX has laid out a comprehensive strategy aimed at the future development of Vietnam’s stock market. A key element of this strategy is the diversification of the product offerings, which is essential for catering to a broader range of investors and trading strategies. The proposed derivatives products will provide new opportunities for hedging and speculation, attracting more participants and elevating market activity.
The HNX’s initiatives come at a crucial time, especially as the Ho Chi Minh Stock Exchange (HoSE) dominates the landscape with the majority of large-cap stocks. In contrast, the HNX primarily supports smaller companies while also managing the Government bond and derivatives markets. By introducing new products, the HNX is positioning itself as a more dynamic player in the financial ecosystem, capable of attracting investment and fostering growth.
Another exciting aspect of the HNX’s strategic vision is the establishment of a specialized capital market dedicated to startups and small to medium enterprises (SMEs). This move aims to pave the way for private sector development, enabling these businesses to access vital financial resources that will encourage entrepreneurship and innovation across the country.
As part of its mandate, the HNX is also focused on further developing the bond market. This includes playing a pivotal role in the auctioning of stocks in line with the privatization of state-owned enterprises. The bond market serves as a crucial channel for state budget capital mobilization, ensuring that the government has the necessary funds to invest in public projects and foster economic growth.
The HNX highlights its commitment to enhancing the efficiency of both the corporate and government bond markets. Improving liquidity in the secondary market while supporting primary market operations is vital for sustaining investor interest and confidence. Transparent practices that ensure fairness for investors will be a fundamental aspect of these efforts.
To achieve these ambitious goals, the HNX is prioritizing the development of modern and open technological infrastructures. This includes integrating IT systems that connect with international financial markets, further enhancing the competitive edge of Vietnam’s stock market.
Moreover, the HNX plans to introduce new products tailored for the government bond market and establish a robust secondary market for corporate bonds. Such initiatives aim to ensure transparency and instill trust among investors, which is essential for the long-term sustainability of the financial ecosystem.
In alignment with government priorities, new regulations regarding corporate bonds will stipulate that only professional investors are permitted to purchase these instruments through private placements. This measure is designed to safeguard the interests of less experienced investors while encouraging informed, strategic investment decisions.
In terms of its derivatives market, the HNX envisions becoming a platform that provides essential risk mitigation tools for investors. This will also cultivate another investment channel that could serve a diverse group of investors, enhancing overall market depth.
In addition to equities and bonds, the HNX is also eyeing the potential organization of commodity derivatives. This focus will revolve around Vietnam’s major agricultural products, such as coffee, cashew, and pepper, as well as critical natural resources, including gas and oil. By exploring commodity derivatives, the HNX is taking proactive steps to broaden its scope and provide investors with even more opportunities.
Established on March 8, 2005, the HNX has dynamically evolved since its inception, following the earlier launch of the Ho Chi Minh Stock Exchange and the formation of the State Securities Commission of Vietnam. The HNX now stands at a pivotal juncture, ready to embrace innovation and support the growth of Vietnam’s financial markets.