Vietnam will attract an additional $25 billion in international investment by 2030 when it upgrades its stock market, according to World Bank estimates.
Vietnam aims to upgrade its stock market from frontier to emerging by 2025. At the conference on stock market development 2024 on February 28, Mr. Ketut Ariadi Kusuma, Head of Finance, Competitiveness and Innovation Group of the World Bank, said that this is a strategic step for Vietnam to transform into an upper-middle-income country by 2035 and a high-income country by 2045.
According to him, the upgrade will be a significant boost for Vietnam's capital market by increasing access to foreign investors. At that time, the market will have a large capitalization scale and attractive liquidity on par with many countries with similar development levels. This could bring 25 billion USD of new investment capital from international investors to the Vietnamese market by 2030, according to World Bank calculations.
In addition, according to a World Bank representative, if Vietnam strongly reforms the insurance industry, investment funds, and solutions to improve the investment environment... it can bring up to 78 billion USD in investment to the capital market.
Mr. Ketut Ariadi Kusuma, Head of Finance, Competitiveness and Innovation Group of World Bank in Vietnam, speaking at the conference on stock market development on the morning of February 28. Photo: VGP
Vietnam's stock market is currently classified as Group 3 - frontier market by two organizations, MSCI and FTSE Russell. In particular, FTSE Russell has put Vietnam on the waiting list to be upgraded to Group 2 - emerging market.
Mr. Ketut Ariadi Kusuma said that the conditions for Vietnam to be upgraded are to resolve issues regarding foreign investor ownership limits and accelerate the equitization of state-owned enterprises.
“If the ownership ratio remains limited, Vietnam may only receive a maximum net inflow of $5 billion. But this condition being fully resolved could bring in an additional $8-15 billion,” Mr. Kusuma added.
Sharing the same view, the Counselor of the Korean Embassy in Vietnam said that loosening the ownership limit for foreign investors will help increase the supply of shares through non-voting depository certificates. This is also consistent with the State's management goals for each industry and profession.
In addition to having more capital, upgrading also helps to increase the quality of goods on the market. According to Mr. Luu Trung Thai, Chairman of MB Military Bank, increasing the quality of goods is an important factor to move towards upgrading. When the market quality is good and the value is high, foreign investors will come to seek profits and investment opportunities.
"Therefore, market quality and more importantly, the completion of the Clearing House (CCP) - the key point when both FTSE and MSCI consider this a bottleneck in upgrading", Mr. Thai said.
State Securities Commission Chairwoman Vu Thi Chan Phuong said the agency is working with organizations and market members to remove obstacles in upgrading Vietnam's securities market.
"This year, the Committee will continue to find solutions to remove obstacles to attract more foreign indirect investment, aiming to upgrade," said Ms. Chan Phuong.
In conclusion, Prime Minister Pham Minh Chinh said that the Government and he personally are very interested in the financial and stock markets. "At 12:40 every day, I always follow the news to see how the stock market is today, in order to have timely policy responses. If I can't follow it, I get very impatient," he said, adding that every week he works and talks with leaders related to market development solutions.
The Prime Minister reiterated the goal of upgrading the stock market to emerging market status by 2025, contributing to attracting 25 billion USD in foreign indirect investment each year, equivalent to the flow of indirect investment capital. To do this, he asked ministries and sectors to promptly remove obstacles in the spirit of "saying is doing, committing must be done", and report the results before the end of June.
Prime Minister Pham Minh Chinh shares with investors on the sidelines of the stock market development conference on February 28. Photo: VGP
In addition to upgrading, diversifying the types of listed enterprises is also a way to help the stock market mobilize more resources. Ms. Nguyen Thi Bich Ngoc, Deputy Minister of Planning and Investment, said that many foreign-invested enterprises (FDI) want to be listed on the stock exchange, when the Securities Law 2019 has been in effect for more than two years. "The management agency needs to soon allow FDI enterprises that meet the conditions to be listed," she said.
The Counselor of the Korean Embassy in Vietnam also recommended that authorities research and create conditions for foreign businesses and startups to be listed on the stock exchange.
The stock market witnessed a "wave" of FDI companies listing on the stock exchange in 2003-2008. In the following years, the number of foreign companies listed on the stock exchange was not much, some were delisted. Currently, there are 6 FDI companies still listed and 3 companies trading on UpCOM. Recently, some large companies have expressed their desire to list on HoSE, such as CP Vietnam - a subsidiary of Charoen Pokphand Foods Group (Thailand).
In response to this proposal, Prime Minister Pham Minh Chinh assigned the Ministry of Finance and the State Securities Commission to immediately remove barriers to facilitate foreign investors. The Ministry of Planning and Investment reviewed and announced the maximum foreign ownership ratio of business lines with conditions or limited access to foreign investors.
At the same time, the State Bank shortens the process of opening indirect investment capital accounts for foreign investors, researches appropriate clearing and settlement tools, and solutions to lower lending interest rates.
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