Vietnam bond market maintains growth momentum amid COVID-19

Friday, 2021-03-26 11:10:12
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Steady expansion in both the government and corporate bond segments support Vietnam’s local currency bond market growth, according to the ADB.
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NDO – Vietnam’s local currency bond market grew 8.1% from the previous quarter to US$71 billion at the end of December 2020, according to the latest issue of the Asia Bond Monitor, as issued by the Asian Development Bank (ADB).

Steady expansion in both the government and corporate bond segments supported the growth, according to the report, issued today.

Specifically, Vietnam’s government bonds grew 7.1% from the previous quarter to US$58.8 billion at the end of December, accounting for 82.8% of the country’s total bond stock.

Meanwhile, corporate bonds also sustained their growth momentum, increasing 13.6% from the previous quarter and 169.5% from a year earlier to US$12.2 billion.

On the regional level, an improving global economic outlook and progress on COVID-19 vaccination have pushed up bond yields in the emerging East Asia region, comprising China, Hong Kong (China), Indonesia, the Republic of Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Local currency bond markets in the region expanded to US$20.1 trillion by the end of 2020, 3.1% higher than the preceding quarter and 18.1% higher than a year earlier.

The size of the bond market grew to the equivalent of 97.7% of the region’s gross domestic product at the end of the fourth quarter of 2020. Local currency bond issuance stood at US$2 trillion.

Government bonds dominated the region’s bond stock at US$12.4 trillion as of the end of December, while corporate bonds amounted to US$7.7 trillion.

Vaccine rollouts have started in most countries in the region, boosting confidence, according to the report. Meanwhile, investor sentiment and financial conditions have also improved, helping boost most equity markets and regional currencies.

Capital flows into the region’s equity and bond markets also recovered in the last quarter of 2020. Government bond yields in most advanced economies as well as emerging East Asian markets increased between December 31, 2020 and February 15, 2021.

ADB Chief Economist Yasuyuki Sawada added that bond markets in emerging East Asia continued to grow, mobilising funding for the region’s sustainable recovery from the pandemic. Successful vaccination campaigns, accommodative monetary policy stances and easing of restrictions are spurring economic activity and shifting the recovery into a higher gear, he added.