Phan Thi Thu Hien, Director of the Department of Banking and Financial Institutions under the Ministry of Finance, said the participation of foreign investors in the country’s G-bond market increased in 2017 compared to 2015 figures. Foreign investors held 5% of the country’s total G-bonds at the end of 2017 against 4.5% at the end of 2015.
Data from the Hanoi Stock Exchange (HNX), which organises G-bond auctions, also showed that foreign investors have been net buyers in the country’s G-bond market for the last two and a half years.
Investors bought more than VND1.5 trillion (US$65.79 million) in G-bonds in the primary market in the first five months of this year. The value in the primary market for 2016 and 2017 stood at VND20.8 trillion and VND10.3 trillion, respectively.
They also spent nearly VND3 trillion for G-bonds in the secondary market in the first five months of 2018, compared to VND12.6 trillion and VND20.5 trillion in 2016 and 2017, respectively.
Chairwoman of the Vietnam Bond Market Association Nguyen Thi Kim Oanh said net purchases made by foreign investors of Vietnamese G-bonds are proof that their confidence in the market has gradually improved.
However, Nguyen Thi Hoang Lan, HNX Deputy General Director, said the proportion of foreign investors participating in the G-bond market has remained low, with their buying value accounting for only 5.3% of the total G-bond issue value in the primary market and 6.1% in the secondary market last year.
Lan said this proportion can be increased by requiring competent State agencies to start considering the interests of foreign investors to be able to offer incentives and ease the influx of investments.
Lan also said the country’s macroeconomic policies should be kept stable and consistent as foreign investors often look at macroeconomic indicators to decide whether to invest.
"The health of the economy is always a top priority for foreign investors when considering whether to purchase national bonds," she said.
According to the HNX, G-bonds worth over VND56 trillion have been successfully issued so far this year.
In May alone, VND11.17 trillion was raised in 20 auctions, up 45.8% from the previous month.
Of which, five-year bonds offer an annual interest rate of 2.97-3%, while bonds with 10-year, 15-year and 20-year maturity periods offering interest rates of 4.15 to 4.26%, 4.5 to 4.6%, and 5.14%, respectively. Compared to the previous month, interest rates on 5-year, 10-year, 15-year, and 20-year bonds were up 0.03, 0.16, 0.13 and 0.02 percentage points, respectively.
The Government plans to issue G-bonds worth VND200 trillion this year, with the focus being on long term maturity and keeping the interest rate at low levels.