Expert warns about challenges for financial market in 2020

The financial market faces six risks the market will have to cope with in 2010, according to Can Van Luc, chief economist of BIDV.

There are three major economic markets, the labor, goods and financial markets, and if those, the Vietnamese financial market made up 323 percent of GDP in 2019.

Expert warns about challenges for financial market in 2020

BIDV's Chief Economist Can Van Luc



Luc said in 2019 the financial market developed in a more active and healthier way,. The monetary and fiscal policies were coordinated well, with a reasonable money supply to the economy, which helped keep the inflation rate at 2.73 percent.

The economist also noted the better resilience of the economy with forex reserves reaching a record high of approximately $80 billion, equal to 3.7 months of imports.

There are three major economic markets, the labor, goods and financial markets, and if those, the Vietnamese financial market made up 323 percent of GDP in 2019.
 

The achievements helped Vietnam jump from the 77th to 67th in the WEF global ranking in the competitiveness index.


Regarding the stock market, in 2019, the capital mobilization through the corporate bond market went well with VND250 trillion worth of funds raised, up by 7 percent compared with 2018.

However, Luc thinks Vietnam still needs to make bigger efforts to create balance for the financial market, where the capital sources still heavily rely on bank loans.

As for stocks, VND314 trillion worth of capital was mobilized in 2019, up by 13 percent. The shares of technology and telecommunication firms had the best performance with the price increase of 36.7 percent, followed by insurance shares with the 20 percent increase. Meanwhile, the prices of securities companies decreased by 16.3 percent.

The credit grew by 13.7 percent in 2019. Currently, credit still makes up 135 percent of GDP, a relatively high level compared with the economy’s size and economic development.

As of the end of 2019, the bad debt ratio had decreased to 1.89 percent. If counting the latent bad debts and the debts at VAMC, the figure would be 4.6 percent. The plan to reduce the bad debt ratio to below 3 percent in 2020 is feasible.

Luc pointed out six challenges for 2020.

First, the institution for digital economy and digital banking has been slow to be set up, while the national and enterprises’ database is fragmented.

Second, the complicated factors in the world will affect the oil and gold prices and exchange rate.

Third, Vietnam needs to increase capital for banks and it bears pressure from public debt payment.

Fourth, the number of cyberattacks increased by 104 percent in 2019.

Fifth, there are financial risks, but there is no common focal point for all segments such as banking - securities - insurance to prevent and manage.

Sixth, how will Vietnam manage its financial economy when 58 banks are considering launching their own cryptocurrencies?

Linh Ha 

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