Speaking at the conference on implementing the task of developing the stock market in 2024 on February 28, Prime Minister Pham Minh Chinh reviewed some outstanding results that the Vietnamese stock market has achieved, including highlights in terms of scale and liquidity.
Specifically, to date, the capitalization of Vietnam's stock market has reached nearly 200 billion USD, larger than many Asian markets such as the Philippines, Qatar, Kuwait... or European markets such as Greece, Czech, Hungary... Average liquidity reached nearly 700 million USD, equivalent to Indonesia, Malaysia, Singapore and second only to Thailand in the ASEAN bloc.
Liquidity is also a plus or minus when rating and market classification organizations such as FTSE Russell and MSCI look at and evaluate. With the above data, the liquidity scale of the Vietnamese stock market has reached the ASEAN region, a result that without the initiative to "rescue" the order congestion situation at the Ho Chi Minh City Stock Exchange (HOSE) in the period of 2020-2021, it would be difficult to develop the scale of investors as recently achieved.
Specifically, since the end of the fourth quarter of 2020, the trading system at HOSE has been frequently overloaded, "frozen" and had prolonged order congestion. This situation has negatively affected market sentiment, investor interests and especially affected the reputation of the Vietnamese stock market in the eyes of foreign investors (FIIs) and rating organizations.
SOVICO Chairman Nguyen Phuong Thao at the meeting with Finance Minister Ho Duc Phoc October 15, 2021
On March 6, 2021, at the "Dialogue 2045" conference, with the message "Trust in the private economy", billionaire Nguyen Thi Phuong Thao proposed the initiative of using domestic capacity and resources to handle the order congestion on HOSE, instead of waiting for foreign experts and the Korean KRX system to operate. The Government supported, the Ministry of Finance "nodded", Sovico coordinated with FPT to launch the "100-day rescue HOSE" campaign.
On schedule 100 days, the new trading system of HOSE from the digital initiative of female billionaire Nguyen Thi Phuong Thao and Mr. Truong Gia Binh - Chairman of leading technology group FPT, Sovico and HDBank together with FPT officially operated, with the capacity to process 3-5 million orders per day, more than 3 times the old system. Immediately after that, liquidity on the Vietnamese stock market exploded, the trading scale successively exceeded the mark of over 30,000 billion and the record ever recorded reached over 56,100 billion VND. Up to now, the average liquidity scale has reached the regional level as the Prime Minister mentioned above.
Ms. Nguyen Thi Phuong Thao and Mr. Truong Gia Binh are both leaders of listed companies in the VN30 group on HOSE, with tens of thousands of domestic and foreign institutional and individual investors as shareholders; typical companies that bring value and trust to investors, contributing to the development of the Vietnamese stock market.
Minister of Finance Ho Duc Phoc awarded certificates of merit to SOVICO Group and FPT Group for their achievements in handling HoSE order congestion.
Flexible solutions and mechanisms
At the recent conference, Mr. Truong Gia Binh - Chairman of FPT said: "We would like to express our gratitude to the Government, the Ministry of Finance, and the State Securities Commission for giving us 100 days to rescue HOSE".
Sending gratitude, because if following the old mechanism, old solutions, digital initiatives like that of businesswoman Nguyen Thi Phuong Thao, or private economic organizations like Sovico, HDBank or FPT would have difficulty participating, affirming their capacity and contributing value in the above campaign. And this is also a typical example of flexibility in solutions and mechanisms to move towards upgrading the Vietnamese stock market.
According to the criteria of FTSE and MSCI, Vietnam's stock market still has some criteria that have not been met and need to be adjusted, according to the updated reports in 2023. Besides the criteria on payment, product diversity, and efficiency of the operating system, both organizations emphasize the criteria on openness to foreign investors.
Currently, the foreign ownership ratio of listed enterprises in Vietnam is limited, especially the "room" of ownership is limited to 30% at commercial banks. Meanwhile, the "room" at banks such as ACB, HDBank, MB, Techcombank... is currently no longer available or has been almost filled. In addition to the criteria for upgrading, creating sources of goods, attractive addresses such as at the above banks to attract foreign capital when upgrading is also a reality, but is currently almost non-existent.
Faced with this reality, as well as aiming to meet the criteria for upgrading the market, at the conference on February 28, experts made a remarkable proposal, a flexible direction like the initiative and campaign to handle the above-mentioned HOSE order congestion problem.
Specifically, the Counselor of the Korean Embassy in Vietnam proposed a flexible solution: Loosening foreign ownership limits to increase the supply of shares for foreign investors, using non-voting depository receipts to match the state management goals set for each industry and profession.
Deputy Minister Nguyen Duc Chi (6th from left) presented flowers to thank market members on July 28, 2022.
Thus, to meet the criteria, Vietnam can be flexible in its mechanisms, have new solutions and directions to move towards the goal of upgrading the stock market. A goal that Prime Minister Pham Minh Chinh emphasized the point of view "Say it and do it".
"We are determined to upgrade Vietnam's stock market from frontier to emerging in 2025," the Prime Minister emphasized at the conference, with a meeting to report on specific tasks next May, ahead of the scheduled assessments in June and September 2024 by MSCI and FTSE.
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