On December 29, 2023, Deputy Prime Minister Le Minh Khai signed and approved the Stock Market Development Strategy to 2030. Accordingly, by 2025, Vietnam's stock market will be upgraded from a frontier market to an emerging market according to the stock market classification standards of international organizations.
Upgrading the stock market is one of the major goals that the Government is aiming for.
Recently, the country's credit rating has been highly appreciated by the world. This is an advantage for upgrading.
In fact, the problem of upgrading Vietnam's stock market has been raised for a decade and according to SSI Securities Chairman Nguyen Duy Hung, it depends a lot on the determination of Vietnamese authorities.
The missed appointment to upgrade the market in 2023 is also one of the reasons why foreign investors are not interested in Vietnamese stocks. Foreign investors net sold about 1 billion USD worth of stocks in 2023.
According to the general assessment of most international organizations, there are currently two key groups of issues that need to be focused on improving and having measures to remove in order to upgrade: prefunding requirements and foreign ownership limits. The management agency is making efforts to implement solutions to remove obstacles in this criterion, including putting the Korean technology trading system KRX into operation.
Many people expect that the dream of upgrading the stock market will soon come true when the Vietnamese economy continues to break through and is a bright spot in the world, the scale of the Vietnamese stock market is constantly growing, equal to many countries in the region, with liquidity in the vibrant period in late 2021 and early 2022 surpassing Singapore and ranking only behind Thailand.
Vietnam also records many regional-scale enterprises such as Vingroup, Vinhomes, Vietcombank, Masan, Vinamilk...
Basically, Vietnam is expected to soon achieve its goal of upgrading its market and then Vietnamese securities will attract large cash flows from foreign investors. Currently, the capital size of funds allocated to frontier markets is less than 100 billion USD, while the cash flow for emerging markets is about 6,800 billion USD. The boom may happen in the next few years.
On November 14, at the Financial Investment Promotion Conference in Los Angeles, California, USA, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said that the upgrade will bring many benefits to the stock market, including attracting indirect foreign capital flows; improving the ability to price stocks, positively impacting the Government's equitization process; increasing the number of large-scale institutional investors, diversifying the investor base; and attracting many new foreign investors.
This has a positive impact on the liquidity of the stock market and the development of the market towards approaching international standards and practices in business operations and corporate governance.
Recently, securities companies have entered a race to increase capital to gain market share before the stock market booms.
Key points in the Stock Market Development Strategy to 2030
The general objective of the strategy is to develop a stable, safe and healthy stock market; enhance risk tolerance, have a reasonable structure between market components, become an important medium and long-term capital mobilization channel, mainly for the economy; build a market management and supervision system associated with the application of modern information technology; strengthen international linkages and integration, gradually narrowing the gap between the Vietnamese stock market and the stock markets of developed countries.
According to the strategy, by 2025, the capitalization of the stock market will reach 100% of GDP by 2025 and 120% of GDP by 2030. The outstanding debt of the bond market will reach at least 47% of GDP (of which the outstanding debt of corporate bonds will reach at least 20% of GDP) by 2025 and at least 58% of GDP (of which the outstanding debt of corporate bonds will reach at least 25% of GDP) by 2030. The derivatives market will grow at an average of about 20 - 30% per year in the period 2021 - 2030.
The number of securities trading accounts of investors on the stock market will reach 9 million accounts by 2025 and 11 million accounts by 2030. The Government requires focusing on developing institutional investors, professional investors and attracting the participation of foreign investors. Increase the proportion of government bonds held by non-bank institutional investors to 55% by 2025 and 60% by 2030.
The next goal is to improve the quality of listed corporate governance above the average level in Southeast Asia; apply good practices on environmental, social and corporate governance standards (ESG standards) at the Stock Exchanges and the Vietnam Securities Depository and Clearing Corporation towards sustainable development according to international practices.
Complete the classification of listed shares on the Stock Exchange in 2025.
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