Ho Chi Minh City Stock Exchange (HOSE), located in Ho Chi Minh City, is the largest stock exchange in Vietnam. Established in 2000 as the Ho Chi Minh City Securities Trading Center (HoSTC), it is an administrative agency of the State Securities Commission, along with the Hanoi Securities Trading Center. The stock exchange is located at 45-47 Ben Chuong Duong, District 1, Ho Chi Minh City, Vietnam.[1] The current top executive of HSX, with the title of Deputy Chairman, is Mr. Tran Dac Sinh.[2]
On 8 August 2007, HoSTC was renamed and upgraded to the Ho Chi Minh Stock Exchange (HOSE).
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The Ho Chi Minh City Securities Trading Center (HoSTC) located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (REE) and Saigon Cable and Telecommunication Material Joint Stock Company (SACOM).
In the beginning, an overall foreign ownership limit of 20% for equities and 40% for bonds was implemented. In July 2003, in a bid to improve liquidity, the government raised the foreign ownership limit for equities to 30% and totally removed the foreign ownership limit of a particular issuer’s bonds. Foreign participants on the Stock Trading Center of Vietnam must register through a custodian licensed to hold securities on behalf of foreigners. Once registered, a securities transaction code is issued to the foreign investor that will permit securities trading.
As of 2006, there are thirteen licensed securities companies. Of these, nine have been licensed to conduct a full range of securities services including underwriting, brokerage, custody, research, portfolio management and trading. The minimum capital required to operate effectively as an investment bank was VND43b (c. US$2.7m).
At the end of 2006, combined market capitalization of both Ho Chi Minh City Securities Trading Center and Hanoi Securities Trading Center is 14 billion US dollars, or 22.7% GDP of Vietnam.
On 8 August 2007, HoSTC was renamed and upgraded to the Ho Chi Minh Stock Exchange. This is the largest stock exchange of Vietnam at the moment.
As of July 2010, there were 247 companies listed on the HOSE with a market capitalization of VND537.4 trillion ($28.28 billion).[3] The exchange had 141 listings in January 2008, including 138 company stocks and three fund certificates, with a total market capitalization of 365.7 trillion dong ($23 billion). Vietnam limits foreign ownership of listed companies to 49%.[4]
The Stock Trading Center of Vietnam is also the official mechanism through which new government bonds are issued, and it functions as the secondary market for a number of existing bond issues. All securities traded on the Stock Trading Center of Vietnam are denominated in Vietnamese dong (VND). Par value is standardized at VND10,000 for equities and VND100,000 for bonds. Trading is conducted daily with two matchings in a morning session, from 9 a.m. to 11 a.m.
The State Securities Commission (SSC), a body established formally in 1996, is responsible for capital markets development, licensing of participants, and the issue and enforcement of regulations. A wide range of regulations, with significant input from multilateral bodies such as the International Finance Corporation, have been promulgated, including those dealing with such issues as insider trading, take-over trigger points and margin lending. To be listed, a company must have been profitable for at least 2 years, have a minimum capitalization of VND5b (approximately US$318,000), and have at least 50 shareholders who are not employees of the company, holding at least 20% of stake. Foreign invested joint venture companies are technically qualified to list, but to do so, they must be reorganized into joint stock company status. Companies intending to list must also submit to audit by an approved, independent auditing company.
The mechanism of trading on the Stock Trading Center of Vietnam is via an automated order-matching system. The capacity of the system is 300,000 orders per day. Currently, trading limits of 5% (for bonds and equities) either side of the previous close apply. No price restrictions have been set for newly listed securities but price caps were applied in the case of the very first day of the market’s operations.
Settlement is centralized through the Stock Trading Center of Vietnam using the Bank for Investment and Development of Vietnam (BIDV), a state-owned commercial bank. Several other domestic banks and securities companies have been authorized to accept custody of securities, with HSBC’s and Deutsche Bank’s Ho Chi Minh City branches currently the only banks providing custody services for foreign investors. Custody is based on a central depository, central registry book entry system.