VietNamNet Bridge – A hot debate continues about the decision to move the headquarters of the stock exchange from Ho Chi Minh City to Hanoi.

The HCMC Stock Exchange.

Ho Chi Minh City is the center of economy and finance of the country. Infrastructure, investors and financial institutions are largely located in the city.

Many experts and investors questioned the move after they learned that the Ministry of Finance had submitted to the PM a proposal to merge Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) as one, based in Hanoi with the name “Vietnam Stock Exchanges”.

The "cradle" of the VN stock market

In the eyes of many investors and financial world, Ho Chi Minh City is the "cradle" of the stock market.

When you say "the Wall Street of Vietnam", domestic and foreign investors will immediately think of the busy area on Nguyen Cong Tru Street (District 1) and the adjacent streets.

The Ho Chi Minh City Stock Exchange is a modern building, which can hold up to 800 employees.

In 2006, US President George W. Bush visited the HOSE during his first trip to Vietnam to ring the gong opening a trading session and then attended a roundtable meeting with Vietnamese and American businesses.

After the visit, the Vietnamese stock market “flew” high and attracted the attention of international investors.

The HOSE building has a total area of 32,000 m2. It is also equipped with an advanced information technology system.

"You can see this is a solid foundation for the development of Vietnam's stock market," a financial expert who is knowledgeable about technology said.

Also, HCM City has granted 5,000 m2 of land in Quang Trung Software Park to HOSE to build a back-up data center, which is being completed.

The general manager of a securities company said the headquarters should be placed in HCM City because most major securities firms and investors are located in Ho Chi Minh City.

Dr. Tran Quang Thang, director of the HCM City Institute for Economic Research and Management, said placing the stock exchanges near the management agencies to facilitate administrative activities is not a good idea because the operations of the stock exchange are not administrative but are trade activities and transactions.

"Ho Chi Minh City is the cradle, the exciting place for development of the stock market. It is also an economic center, which attracts foreign investors, so why don’t we select it to base the headquarters of the Stock Exchanges," Dr. Thang said.

Worldwide practice

In 2006, US President George W. Bush visited the HOSE during his first trip to Vietnam to ring the gong opening a trading session.

Nguyen Manh Ha, the Chair of Tien Len Steel Corporation, said previously he had two companies listed on the stock market.  He then merged them into one and listed the firm on HOSE because HOSE has a huge influence on foreign investors.

"It is the most reasonable and advantageous for headquartering the stock exchanges in HCM City," said Ha.

Dr. Nguyen Tri Hieu, a financial expert who has worked for many years in developed countries, said that in countries with developed financial markets, most of the headquarters of the stock exchange is located in financial centers, which have the most powerful financial and stock market.

He said the headquarters of the US stock exchange is located in the financial center of New York City, not in Washington D.C; China headquarters its stock exchange in Shanghai, not Beijing; the stock exchange of Germany is located in Frankfurt, not Berlin.

"The principle of the world is where the transaction is strong, thriving, that is where the headquarter are in order to create favorable conditions for all market participants," said Dr. Hieu.

No final decision

The scheme to establish the Vietnam Stock Exchange drafted by the Ministry of Finance includes four major provisions: restructuring infrastructure and goods; restructuring intermediary institutions; restructuring investor base; and restructuring the stock exchanges.

HCM City Chairman Le Hoang Quan said this is a proposal submitted to the PM by the Ministry of Finance, not a final decision. However, HCM City has prepared documents sent to the Prime Minister on related issues.

More than 300 listed companies

Established in July 2000, with only one or two listed companies at the time, HOSE has since that time attracted more than 300 listed firms with capitalization value by the end of 2014, accounting  for 88% of the total capitalization value of the Vietnamese stock market, equivalent to 25.5% of GDP.

Most large corporations representing key sectors of the economy are listed on HOSE.

Currently, the average market capitalization of listed companies has reached VND3.23 trillion.

The average trading value on HOSE during a session has increased from a few hundred million dong (several tens of thousand USD), has reached VND2.171 billion in 2014, accounting for 73% market liquidity.

Since 2007, HOSE has joined the conference of general managers of ASEAN stock exchanges, is a founding member of the Initiative for ASEAN Integration, and a member of stock exchanges in Asia, and Oceania.

In 2013, HOSE became a full member of the World Federation of Exchanges (WFE). More importantly, HOSE has signed cooperation memorandums with 18 stock exchanges in the world.

Son Nhung (NLD)