Vietnam's bond market grows fastest in East Asia: report

The government bond market in Vietnam has witnessed an average annual increase of 23 percent over the past five years, posting the fastest growth in emerging East Asia and the ASEAN+3 regions, according to latest report of the Vietnam's State Securities Commission (SSC).

Since September 2009, the northern Hanoi Stock Exchange has raised over 654 trillion VND (30.78 billion U.S. dollars) from G- bond auctions to secure medium- and long-term funding for development investments. The State Treasury has raised 513 trillion VND (24.14 billion U.S. dollars), or 13 times higher than in the 2000-2008 period, local Saigon Times daily reported Friday.

Since 2012, bond auctions have become a major channel for raising capital, with mobilization value rising gradually. In 2013, 194 trillion VND (9.13 billion U.S. dollars), or 18 percent of total investments in the economy, was mobilized.

Liquidity on the market has also improved strongly from 365 billion VND (17.17 million U.S. dollars) per session in 2009 to more than 2.7 trillion VND (127.08 million U.S. dollars) per session in the first half of this year.

Treasury bill auctions at the State Bank of Vietnam have also been held on the G-bond market since Aug. 24, 2012, creating a concentrated market to facilitate investor trading, said the SSC.

At present, banks are the main investors on the G-bond market, holding 86 percent of the bond portfolio value. Insurance firms, fund managers and foreigners have also joined the market.

Since 2011, the ratio of foreign participation has jumped to 20- 30 percent in the secondary market and 12 percent on the primary market.

According to the Asian Development Bank (ADB), emerging East Asia's local currency bonds have performed well so far this year, but an earlier-than-anticipated U.S. rate hike, a slowing property market in China, and higher risk aversion and inflation due to the Middle East tensions could undermine that.

Vietnam was the fastest growing local currency bond market, both on a quarterly and an annual basis. However, China remains the largest market in Asia, with 4.9 trillion U.S. dollars in outstanding bonds.

According to ADB, emerging East Asian economies include China, China's Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.