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The right message is needed for the stock market amid a critical situation

The Prime Minister on April 11 sent an urgent telegram directing ministries and branches to take measures to stabilize the stock market and corporate bond market.

The document shows a timely message and commitment, which aims to reduce the risk of a ‘hard landing’ following a number of controversial stock market issues. The aim is to develop a healthy, transparent and safe market and protect investors’ legitimate rights.

Developing the corporate bond market is an appropriate policy to create more capital mobilization channels for enterprises. 

For tens of years, businesses could only seek capital from bank loans. Black credit was too expensive and risky. 

In other words, many burdens have been placed on monetary policy. The policy has been adjusted to implement many different tasks: fighting inflation, stabilizing the macro-economy, and promoting growth.   

In 2015, when the economy regained growth after the 2008-2012 crisis which brought serious consequences, then Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh said bank credit accounted for up to 80 percent, while securities and insurance only 20 percent. 

He said: “It’s necessary to end the period when bank credit both provides short-, medium- and long-term loans, and flows to the stock market.” 

However, the monetary policy continues to shoulder almost the entire burden of providing credit to the economy. 

The M2/GDP ratio increased from 146 percent in 2016 to 153 percent in 2017, 157 percent in 2018, 165 percent in 2019 and 180 percent in 2020. The ratio of Vietnam is the highest in Asia, according to Pham The Anh from the National Economics University.

The corporate bond market, which has developed recently, plays a very important role in helping lift the burden on the monetary policy which strives for many different goals.

Businesses are struggling to exist after the lockdowns imposed to fight Covid-19 in 2020 and 2021. In these years, the number of businesses leaving the market reached a record high, according to the General Statistics Office (GSO). The rotation of money in 2021 decreased by half, which shows how businesses hibernated and how the economy slowed down.

Since the day the Government decided to shift to the ‘safe adaptation to Covid-19’ policy, businesses have had to overcome difficulties to survive. Lack of liquidity has been the biggest problem. Issuing bonds in accordance with Decree 153/2000 is a reasonable solution.


In December 2020, the Government issued Decree 153 on private placement of corporate bonds and trading of privately placed corporate bonds in the domestic market and offering of corporate bonds to the international market.

The legal framework, plus the urgent need for liquidity after Covid-19, both have led to a boom in the corporate bond market with VND723 trillion worth of bonds issued in 2021, according to SSI.

Of this, privately offered bonds accounted for 91 percent, or VND650 trillion. As such, the value of bonds issued over the last two years alone reached nearly one quadrillion.

Analysts say that the bond market has become more fragile and vulnerable following the arrest of Tan Hoang Minh and FLC Group’s chairs. Many questions related to the protection of investors’ interests, as well as the tightening of the control over bond issuances, have arisen.

These are problems that need to be solved immediately to reassure the public.

Tan Hoang Minh has committed to pay money back to investors under different modes. For contracts that are due for payment: investors will get refunds as soon as possible. As for contracts that are not yet due for payment, Tan Hoang Minh will work with state management agencies, issuers and asset management banks to give money back in accordance with instructions by appropriate agencies.

State management agencies need to cooperate with enterprises to deal with the problem so as to calm the market.

Meanwhile, investors need to be calm and learn a lesson. They need to read Article 8 of Decree 153, which says that investors buying bonds need to take responsibility for their investment decisions and accept risks in their investments. The Government doesn’t act as a guarantor for issuers’ debt payments.

Lawyer Truong Thanh Duc, Director of Anvy Law Firm said the government should not tighten the market.

“Current laws do not restrict individuals and businesses’ borrowing of capital from friends, banks, organizations and individuals to develop their business, so the fundraising from private offering of bonds must not be tightened by licensing as proposed,” Duc said, adding that the legal framework needs to respect the principle of a market economy. 

He went on to say that transparency, warnings and sanctions are the three things that a corporate bond market needs to have.

“The work of a ‘market creator’ is ensuring the transparency of the market’s operation. It needs to supervise the market, give warnings and impose heavy sanctions on the profiteering committed by involved parties,” he said.

Small problems need to be settled immediately, or it will become serious. The Prime Minister’s messages, commitments and solutions are timely and reasonable. But there should be more measures as well to reassure the market. 

The arrest of Tan Hoang Minh and FLC chairs aims to make the market more transparent, not to crush the market.

Tu Giang


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