Recently, at the Meeting with Institutional Investors and Partners with the theme "Unlocking the potential of Vietnam's stock market - towards emerging market status" in Hong Kong, China, Ms. Vu Thi Chan Phuong - Chairwoman of the State Securities Commission (SSC) stated that upgrading the stock market is one of the major goals that the Vietnamese Government is aiming for.
This goal has been included in the Project “Restructuring the stock market and insurance market to 2020 and orientation to 2025”; at the same time, it has also been included in the draft “Strategy for stock market development to 2030”. Accordingly, Vietnam aims to upgrade the stock market from a frontier market to an emerging market before 2025.
At the same time, the Conference was also co-organized with the Asian Securities and Financial Markets Association (ASIFMA) and the World Bank Group (WB) to discuss solutions towards upgrading the Vietnamese stock market from a frontier market to an emerging market.
Also at the Conference, the leader of the State Securities Commission affirmed that in recent times, the management agency has been making efforts and showing great determination to promote and shorten the roadmap for upgrading the Vietnamese stock market.
Accordingly, in terms of legal framework, the Securities Law 2019, Investment Law 2020, Enterprise Law 2020 and guiding documents have gradually met the criteria for upgrading the market such as: facilitating investment capital flows; access to information in English; registering and opening accounts for investors; strengthening discipline, strictly handling violations to make the market more transparent...
Ms. Vu Thi Chan Phuong - Chairwoman of the State Securities Commission.
“In addition to growing in size and liquidity, the Vietnamese stock market is becoming more transparent and healthy as many violations are strictly handled. Currently, many businesses have been proactive in disclosing information in English, of which, in the VN30 group alone, 100% of businesses disclose information in English.
Many new issues supporting the upgrade have also been more clearly regulated in Decree 155/2020 and Circular 96. In the coming time, the SSC will continue to propose amendments to relevant legal documents to ensure the stock market increases transparency, publicity, sustainability, and supports the upgrade process," said the SSC representative.
Along with that, the management agency also regularly exchanges with MSCI and FTSE Russell to update information, as well as to help the management agencies understand the requirements and criteria from the organizations, thereby having solutions for amendments.
According to the general assessment of major international rating organizations and financial institutions, Vietnam has made many improvements and achieved many important criteria.
However, there are currently two key groups of issues that need to be focused on improving and having measures to resolve in order to create conditions for foreign investors to participate in the stock market in the coming time, which are: Prefunding requirements and foreign ownership limits.
Both of these issues require practical coordination from relevant agencies and ministries to resolve, such as the State Bank of Vietnam (SBV) and the Ministry of Planning and Investment.
According to investors, to be upgraded, Vietnam needs to implement the central clearing partner (CCP) model as stipulated in Decree 155/2020, in which the depository bank must be a clearing member; and fully disclose the maximum foreign ownership ratio of conditional business lines, limit access and only limit foreign ownership to really necessary industries.
Regarding the issue of prefunding, when permitted by the State Bank, the solution to deploy a CCP system in which the depository bank must be a clearing member (in addition to clearing members being securities companies) is the optimal solution to handle the issue of pre-transaction margin requirements. If the prefunding issue is not resolved, the story of upgrading the Vietnamese stock market will be very difficult to achieve the goal.
Overview of the Conference.
In addition, the representative of the State Securities Commission added that while waiting for the CCP, the management agency is currently studying immediate technical solutions to minimize foreign investors' concerns regarding pre-transaction margin. In the long term, the CCP must be implemented, in which custodian banks are also clearing members alongside securities companies, but this requires permission from the State Bank.
Speaking at the conference, Mr. Lyndon Chao, representative of the Asian Securities and Financial Markets Association (ASIFMA), said that Vietnam has been one of the fastest growing economies in Asia and the fastest growing region in the world. Vietnam is a country that benefits from the diversification of global supply chains and a rapidly growing middle class.
According to McKinsey Research Institute, nearly 70% of Vietnamese consumers have an optimistic view of the future. Global investors continue to increase their investment in Asia and Vietnam is a prominent investment destination in Asia in the future, as the regulatory agency's efforts to reform the market will make it easier for global fund managers to access Vietnam.
At the conference, investors expressed their appreciation and real desire to seek investment opportunities in the Vietnamese stock market. The issues that investors are interested in and raise for Vietnam are the need to continue promoting a transparent, healthy capital market and creating more favorable conditions for foreign investors, while also raising issues related to upgrading and solutions for developing the Vietnamese stock market in the coming time .
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