Vietnam is focusing on removing “bottlenecks” to upgrade the stock market. The Securities Law (amended) and Circular 68 have contributed to overcoming the market’s weaknesses.
On December 6, Financial Investment Magazine organized the Workshop "Capital Market Overview in 2024 and Prospects for 2025".
Ms. Ta Thanh Binh, General Director of Vietnam Securities Depository and Clearing Corporation (VSDC), said that in a recent working session, FTSE Russell, a market rating unit, affirmed that Vietnam has met 7/9 criteria for upgrading the stock market.
Two criteria that need to be improved include removing the requirement for foreign investors to deposit funds before trading (prefunding) and handling failed trades (failed trade management).
Regarding the first criterion, the Ministry of Finance recently issued Circular 68/2024/TT-BTC with the important content of removing the mandatory deposit requirement for foreign investors.
With the final criterion for upgrading being the handling of unsuccessful transactions, according to Ms. Binh, the solution is to apply the central clearing mechanism (CPP).
The new regulations in the Securities Law that have just been passed have paved the way for the securities industry to continue implementing solutions to upgrade according to MSCI standards. By June 2024, the Vietnamese stock market has met 10/18 criteria.
Some criteria still need improvement such as foreign ownership limit, remaining foreign ownership level and the level of liberalization of the foreign exchange market have not been met...
Ms. Binh affirmed that with institutional reforms, the market will welcome large capital flows. However, this also poses the problem of pressure on the system with large transaction volume, value, and faster transaction frequency.
“The frequency of transactions is more frequent and continuous, which can put a lot of pressure on the transaction system and the clearing and payment system. Besides, there are issues related to whether foreign currency conversion is capable of meeting such a large volume of transactions or not,” said Ms. Binh.
According to Ms. Binh, the pressure to maintain the upgrade when the new rating criteria have been met will also be a challenge for the parties involved. Pakistan's stock market was once upgraded but then downgraded to frontier market status.
According to Mr. To Tran Hoa, Deputy Director of the Market Development Department (State Securities Commission), Circular 68 amends and supplements a number of articles of circulars regulating securities transactions on the securities trading system; clearing and settlement of securities transactions; and operations of securities companies.
The Circular has added regulations on stock purchase transactions that do not require sufficient funds when placing orders by foreign institutional investors and sets out a roadmap for implementing information disclosure in Vietnamese and English.
This is the legal basis for foreign investors to participate in the Vietnamese stock market at lower costs but minimize risks for investors.
On November 29, the National Assembly passed the amended Securities Law, focusing on three policy groups: improving transparency and efficiency in issuance activities, continuing to perfect regulations to strengthen supervision and strictly handle acts of fraud and scams in issuance activities.
“These are regulations that promote the responsibility of relevant organizations and individuals to ensure the development of the stock market,” said Mr. Hoa.
In 2025, to ensure the continuous, smooth, stable and transparent operation of the stock market, Mr. Hoa said, the State Securities Commission will continue to prioritize solutions to complete the goal of soon upgrading the stock market.
At the same time, continue to implement the solutions proposed in the action program to implement the Stock Market Development Strategy to 2030.
Mr. Nguyen Quang Thuan, CEO of FiinGroup, said that the Vietnamese stock market is a “war” between 9 million personal accounts, including 3-4 million individual investors, and foreign investors. Therefore, it is necessary to pay attention to information transparency and promote domestic investment funds to “fight” with foreign investors. Foreign investors are very lazy to cut losses, but individual investors are losing money (in 2021 and early 2024). Because foreign investors invest through funds and invest for the long term, they rarely lose money, but at the present time, individual investors are more likely to lose money, partly due to the "surfing" mindset. |
Source: https://vietnamnet.vn/thi-truong-chung-khoan-viet-nam-se-som-duoc-nang-hang-2349305.html
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