Expected Stock Market Enhancement by September
Hanoi - Vietnam is gearing up for a major makeover in its stock market, striving to upgrade to the emerging market status by September 2025. This ambition was emphasized in a recent press conference by Deputy Finance Minister Tran Quoc Phuong, who highlighted the government's resolve to achieve this milestone.
To achieve this goal, the Ministry of Finance (MoF) is spearheading a comprehensive plan to beef up market capabilities and align with the stringent criteria set by international rating agencies like FTSE Russell and MSCI. While Vietnam has generally fulfilled the essential technical criteria, securing the trust of foreign investors and ensuring a transparent and accessible investment environment remains key.
Here's a sneak peek at the strategic initiatives the Vietnamese government is planning to implement:
Leveraging Advanced Technology: The KRX System
To boost trading efficiency and risk management for foreign investors, Vietnam has rolled out a new technology platform called the KRX system. This system, developed in partnership with Korea Exchange since 2012, introduces advanced features for transaction processing and payment, streamlining the investment process.
Regulatory Changes: Breaking Barriers for Foreign Investors
Recent regulatory changes, such as Circular 68/2024/TT-BTC, have made it possible for foreign institutional investors to place buy orders without needing full upfront funds. This reform is expected to enhance investment fluidity and attract more foreign capital.
Emphasizing Transparency and Simplifying Procedures
To promote transparency, the MoF is reviewing and amending Decree 155 to clarify the timelines for public companies to report their foreign ownership limits. Simplifying the procedures for opening indirect investment accounts is another focus, with the Ministry working in tandem with the State Bank of Vietnam (SBV) to facilitate foreign capital inflows.
Omnibus Trading Accounts: A Stepping Stone for Foreign Funds
The introduction of omnibus trading accounts for foreign funds is set to simplify transactions, allowing fund managers to execute trades on behalf of multiple portfolios simultaneously. This move aims to enhance operational efficiency for foreign institutional investors.
Supply, Listing, and Indices: Diversifying Financial Products and Markets
The MoF is also working on increasing the supply of financial products, improving the listing process for companies after their IPOs, and developing new investment indices to provide more benchmarks for fund managers.
The Dialogue Group: Bridging Communication Gaps
To ensure ongoing dialogue between regulators and market participants, a policy dialogue group will be established, comprising representatives from the State Securities Commission, investment funds, and securities firms. This group will facilitate timely discussions on market needs and regulatory responses, a crucial step to making policies more responsive.
Despite the significant moves, Vietnam still faces challenges in gaining foreign investor trust. For instance, FTSE Russell's recent report has classified Vietnam as a frontier market due to concerns about payment systems and market accessibility. However, the removal of pre-funding requirements has been recognized as a positive development, signaling that improvements are underway.
An investor watches market movements on his screens. - Photo vietnamplus.vn
The Government's determination to lift Vietnam's stock market is palpable, with a clear political will demonstrated at various regulatory meetings. As the September deadline approaches, the financial community remains hopeful that these efforts will culminate in a successful upgrade, positioning Vietnam as a prime investment destination in the region.
- The Deputy Finance Minister, Tran Quoc Phuong, emphasized the Vietnamese government's resolve to upgrade the stock market to the emerging market status by September 2025.
- The Ministry of Finance (MoF) is implementing a comprehensive plan to upgrade Vietnam's stock market by aligning with the stringent criteria set by international rating agencies.
- To enhance trading efficiency, Vietnam introduced the KRX system, a partnership technology platform developed with Korea Exchange since 2012, featuring advanced transaction and payment processing.
- Recent regulatory changes, like Circular 68/2024/TT-BTC, enable foreign institutional investors to place buy orders without the need for full upfront funds, enhancing investment fluidity.
- The Vietnamese government aims to promote transparency by reviewing and amending Decree 155 to clarify timelines for public companies to report their foreign ownership limits, and simplifying procedures for opening indirect investment accounts.
- Omnibus trading accounts for foreign funds will be introduced to enable fund managers to execute multiple portfolios' transactions simultaneously, enhancing operational efficiency.
- The MoF is focusing on increasing the supply of financial products, improving the listing process for companies after IPOs, and developing new investment indices to offer more benchmarks for fund managers.
- To facilitate communication between regulators and market participants, a policy dialogue group will be established, consisting of representatives from the State Securities Commission, investment funds, and securities firms, to ensure timely discussions on market needs and regulatory responses.
