With a population of slightly over 98 million, Vietnam is predominantly a youthful country. More than 70% of the Vietnamese population is aged below 35 years. In terms of education, the country has an impressive 98% literacy score for its 15-35 age bracket, surpassing the 91% global average.
Thanks to its young and tech-savvy population, Vietnam is poised to reap big from the digital revolution sweeping across the length and breadth of the country. Every sector is being impacted by the transformation including its securities exchanges. For instance, trading platforms are now providing Vietnamese with state-of-the-art infrastructure to execute their trades. While same day trading is still prohibited at the main exchanges in Vietnam, a day trader can quickly sign up on a trading platform and begin buying and selling securities right away.
Thanks to these digital efforts, Vietnam now ranks second to Indonesia in Southeast Asia in terms of the pace of growth in the internet economy. The fast and stable internet connectivity and more than 93% smartphone penetration has created additional access to opportunities that were previously hard to reach.
Intraday Trading in Vietnam
Day trading is a security trading practice where traders buy and sell the same security within a trading day. Most global financial markets allow for day trading, but you’ll find most day traders in stock and forex markets.
With access to leverage and market-moving information, traders can take advantage of small price movements to enter and exit positions. Day traders use strategies including scalping, range trading, news-based trading, and high-frequency trading to run their trades.
Vietnam has two main exchanges – Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) -both of which open at 9:00am local time and close at 15:00, with a one hour and 30 minutes break in between. For unlisted securities, there is a mezzanine exchange known as the Unlisted Public Company Market (UPCOM) for over the counter (OTC) trades.
The settlement cycle for equities and covered warrants on the exchanges is T+2 while for debt is T+1. That means if you buy a security on Monday, the trade will settle on Wednesday for equities and Tuesday for bonds. For the OTC market, settlement cycles depend on the agreements between the trading parties.
Currently, Vietnam doesn’t allow short selling and intraday trading. However, the Ministry of Finance already issued a draft circular number 120/2020/TT-BTC that if implemented may see investors open intraday trading accounts alongside their main trading accounts.
Digital transformation Pillars to Enable Day Trading
At a webinar held under the Ministry of Investment and Planning, leading economists and program leaders identified key pillars that are central to enabling Vietnam to capture its digital opportunity. Here is a brief overview of a couple of the pillars.
Development of the Local Technology Ecosystem
Vietnam is improving its digital infrastructure and reviewing regulations guiding foreign technology transfer. For instance, the Vietnam’s government passed a resolution appointing the State Bank of Vietnam (SBV) to oversee the development of a fintech regulatory sandbox. The sandbox will nurture fintech innovations and provide room for their testing before they are launched to the public.
Since day trading requires an innovative financial and technology system these developments will have a significant impact on cross platform interoperability and movement of funds within the financial system.
To unlock digital opportunities, the government has placed a strong emphasis on the acquisition of digital skills for its population. In November 2021, the Ministry of Industry and Trade in collaboration with Google, trained 650,000 people in e-commerce, digital marketing, business management skills, and virtual presence.
In yet another enabler, the government in September 2021 launched the “Internet Connection and Computers for Students” programme. This initiative will see the whole country connected to the internet and every school going child having access to a computer for online learning by end of the 2022-23 period.
These digital skills also create pathways to other opportunities in areas like stock and forex trading that require good research and internet usage skills.
Development of An Environment to Enable Digital Trade
Digital trade is crucial in enhancing economic opportunities. In Vietnam, the government is putting in place mechanisms to regulate cross border data flows, minimize border frictions and enable seamless interoperability of digital platforms.
In 1998, Vietnam joined the Asia-Pacific Economic Cooperation (APEC). Currently, the country is in the process of reviewing the APEC Framework, with the intention of adopting it. The framework will guide the country in the development and implementation of information privacy protection. This will ensure free flow of information in the region and attract investors who will in turn grow key economic sectors such as the financial industry.
Day trading is hugely dependent on credible information, both local and international. With such initiatives in progress, Vietnam is on the right path to boosting its profile in the financial space.
As Vietnam is mainstreaming its economy, digital transformation will play a key role in unlocking trillions worth of economic value. Looking at the progress the country is making in harnessing key technologies such as mobile internet, cloud computing, big data, artificial intelligence, and financial technology, it is only fair to say that numerous transformative opportunities lie ahead.