In order to find practical and effective solutions, promote more transparent and effective information disclosure by market members, and support the upgrading of Vietnam's stock market from a frontier market to an emerging market, the workshop "Upgrading the stock market and information transparency of listed companies" was held on October 10 to assess the difficulties and obstacles in the past time.
Speaking at the workshop, Mr. Pham Hong Son - Vice Chairman of the State Securities Commission (SSC) said that the SSC considers upgrading the stock market from a frontier market to an emerging market as an important goal.
Currently, the Vietnamese stock market is a member of the World Federation of Stock Exchanges (WFE), and the legal framework regulations of the market, including decrees, are also moving towards meeting world standards.
“First of all, it requires that information disclosure by listed companies be in English. Currently, our regulations are only at the encouraging level, but if they are mandatory, it will put great pressure on businesses. This seems like a simple issue, but only a few large businesses meet the requirements. Therefore, if it becomes a regulation, it will be difficult to enforce sanctions. Every step must have a suitable approach,” said the Vice Chairman of the State Securities Commission.
At the same time, he also gave specific examples such as: According to FTSE Russell and MSCI, foreign investors currently do not know the specific foreign ownership ratio of enterprises, so it is difficult to make investment decisions; It is forecasted that more than 10 billion USD will flow into Vietnam when it is upgraded, but not for all markets, but foreign investors will choose good enterprises. However, if we want to choose good enterprises, will our country expand foreign room?
Mr. Pham Hong Son - Vice Chairman of the State Securities Commission.
From that, it can be seen that upgrading seems to be a big issue but includes many specific issues. Basically, Mr. Son realized that the scale of the capital market, and market transparency to ensure the upgrading criteria still have many challenges in terms of integrity, risk tolerance, and for the Stock Exchange, it is to ensure smooth transactions.
“We have reported to the Ministry of Finance and the Prime Minister to find solutions. Through discussions with foreign investors, I see that they have high expectations for the Vietnamese stock market. Accordingly, the stock market must have a better legal framework, information disclosure must be more transparent, safer and more sustainable. Because the root is that the stock market must be transparent and protect investors,” Mr. Son affirmed.
Regarding the issue of upgrading, Dr. Can Van Luc - Economic expert said that the stock market has 2 upgrading levels: FTSE and MSCI.
“I compare level 1 to the Sea Games playground, level 2 is reaching the Asian level. I see that we need to endure greater pressure to reform, especially regarding legal regulations related to publicity and transparency,” said Dr. Can Van Luc.
Vietnam is currently lacking this factor, while this is a solid foundation for the development of the stock market. Therefore, Vietnam needs to create pressure on governance, supervision, and improve governance, Dr. Can Van Luc said, the market "size" is getting bigger and bigger, sometimes even accounting for 100-120% of GDP, so listed enterprises need to have different governance methods.
Mr. Luc also emphasized that upgrading the stock market is associated with the story of establishing an international financial center in Ho Chi Minh City and Da Nang. With the current FTSE level, our country is lacking two important criteria: Requiring a deposit before trading; leading to a lack of criteria for errors and risks in payment. According to a survey on cases of no deposit, the rate of investors in the world not paying is only 2%, equivalent to a loss of 3 billion USD/year.
Accordingly, Mr. Luc also proposed 3 measures to prevent risks: First, Vietnam needs to resolutely upgrade its information technology system to avoid errors. Second, control investor behavior by increasing sanctions, imposing fines of 1,000-5,000 USD, or calculating fines based on the amount of money.
Dr. Can Van Luc - Economic expert.
Finally, increase the authority of securities companies (SCs) to assess risks and make their own decisions. SCs are allowed to decide whether investors need to deposit funds or not. Regarding the risk handling mechanism, SCs are allowed to confiscate assets, securities, and liquidate securities in case investors cannot pay.
Regarding MSCI's criteria for upgrading the market, the stock market currently lacks 9 criteria and needs to be supplemented, including: Foreign ownership limit; remaining foreign "room"; equal rights for foreign investment; level of foreign exchange market liberalization; information flow; clearing; ability to transfer without going through the exchange; securities lending; and short selling.
"Regarding the issue of foreign investor ownership, we need to consult and review the areas that need and do not need control, and review Decision 155. In addition, we need to pay more attention to the freedom of capital flows and foreign exchange transactions, because this is an extremely important factor for the international financial market," Mr. Luc emphasized.
It is necessary to further liberalize capital flows and foreign exchange transactions, increase the attractiveness of the dong, and make the dong more freely convertible both domestically and internationally. Finally, the expert hopes that the State Securities Commission will have a project to "fill in" the missing gaps and come up with a more specific project .
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