A panel discussion as part of the seminar on Buying and Selling through the Commodity Exchange held by Doanh nghiep & Hoi nhap magazine in HCM City on January 12. (Photo courtesy of the organiser) At the seminar "Buying and Sellingthrough Commodity Exchange - Sustainable Business Solutions, MultiplyingProfits" held by Doanhnghiep & Hoi nhap (Business and Integration) magazine, Pham Hai Tung,Vice Chairman of the Vietnam Association of Small and Medium Enterprises, saidcommodity exchange is popular around the world.
Indices of a number of reputable commodity exchanges havebecome benchmarks for the world market, he said.
While it is possible to trade in physical commodities, it is farmore common to trade in financial contracts based on commodity prices, known asderivatives.
Tung said the Mercantile Exchange of Vietnam (MXV) was establishedby the Ministry of Industry and Trade in 2010. The legal corridor for trading onthe exchange is as open as at international exchanges.
MXV currently lists 45 products under five commodity groupsconnected to eight major commodity exchanges in the world.
By the end of August 2023, the number of accounts on the MXVplatform reached more than 30,000. The average transaction value per session inthe first eight months of last year was 4 trillion VND (163.4 million USD),with the peak session topping 9.5 trillion VND (388.2 million USD).
Dr. Dinh The Hien, Director of the Research Institute ofInformatics and Applied Economics, said the commodity exchange plays animportant role in the process of developing a market economy, a financialmarket and an agricultural market.
“When participating in the commodity exchange, a farmer can sellthe crop in advance at a known price via futures contracts, manufacturers canpurchase raw materials in advance to hedge against a potential rise in inputprices in the future, saving on storage fees, while exporters can sell inadvance to fulfill price commitments with foreign customers, and investors canmake profits through the use of leverage," Hien said.
Participating in the commodity exchange will also help createfair, competitive prices for Vietnamese agricultural products and preventprices of produce from plummeting when farmers have bumpercrops, and enable farmers to directly access the market and connect withthe global agricultural market.
Nguyen Quoc Thinh, Chairman of Gia Cat Loi Commodity Trading JSC,said that participating in the commodity exchange may bring superior returns toinvestors and businesses regardless of the market's ups and downs. The marketfeatures flexible transaction time, high liquidity and fast transactions. Inparticular, investors do not bear much inventory risks when trading on theexchange.
However, according to Hien, the Mercantile Exchange ofVietnam has not fully promoted its role in contributing to thedevelopment of the agriculture industry and creating benefits for farmers andagricultural production companies.
Products listed on the exchange are of foreign commodityexchanges, without any domestic products listed on the MXV platform yet despiteVietnam having strengths in the production and export of Robusta coffee,pepper, rice, seafood and other farm produces.
Therefore, MXV needs to do more in order to bring more benefitsto local agriculture, farmers and businesses, he said.
Luong Van Tu, former Chairman of the Vietnam Coffee and CocoaAssociation, said that there is huge potential for selling agriculturalproducts through commodity exchanges. But this is a form of investment, sothere is still potential risk if investors do not have knowledge andexperience.
Tu noted that they need to participate in professional trainingcourses before joining in the market. They also need to keep abreast withmarket information and factors that could affect prices, he added./.
VNA
