Businesses offer recommendations to secure Vietnam stock market status upgrade

Representatives of businesses, investment funds and securities companies have recommended no foreign ownership limit (FOL), technology application improvement and diversification of stocks listed on the Ho Chi Minh Stock Exchange (HoSE) in an effort to upgrade Vietnam's stock market status.

At a Wednesday conference launching stock market development tasks in 2024, Truong Gia Binh, chairman of FPT Corp, said Vietnam's stock market must rise to a higher level to be on par with those of major market economies.

“What major stock markets are doing, we must also do. This all depends on us,” he noted.

To do this, Binh stressed the importance of technology to the stock market, with three key words “D-G-I” (Digital-Green-Artificial Intelligence).

“Vietnam can apply it to protect the assets of the state, businesses and people. More broadly, the country has great potential in all three aspects of D-G- I. The issue here is whether Vietnam can use its technological potential to develop the economy,” he said.

For his part, Dominic Scriven, chairman of Dragon Capital Group, emphasized the need to constantly develop the infrastructure, platforms, and ecosystem of the capital market.

It is necessary to constantly strengthen confidence in the stock market, especially confidence among investors, and launch a central clearing counterparty (CCP) in Vietnam, he said.

He also recommended promoting the development of a financial center, saying this is a golden chance for Vietnam.

Minister-Counselor of the South Korean Embassy in Vietnam Yoon Sang Key stressed the need to diversify stocks listed on the HoSE by moving tickers from the Unlisted Public Companies Market (UPCoM) - a market where 50% of capitalization belongs to the industrial goods and services an food & drinks sectors - to the HoSE. Currently, the banking and real estate industries account for the majority of the HoSE's market cap.

In addition, it is necessary to loosen foreign ownership limits to increase the supply of stocks for foreign investors, using non-voting depository receipts (NVDR), he stated.

He suggested creating favorable conditions for the listing of startups and FDI enterprises to improve market diversity.

Johan Nyvene, CEO of Ho Chi Minh City Securities JSC, suggested that listed companies in sectors that are not subject to foreign ownership restrictions can proactively have registration details changed to increase their FOL.

Nyvene also suggested that Vietnamese authorities remove the existing pre-funding requirement, saying this would make Vietnam more attractive to foreign investors and make the market status upgrade more feasible.

Citing criteria set by MSCI and FTSE Russell, the two most important international organizations in stock market classification, Nyvene recommended that Vietnam make improvements related to liquidity, transparency and corporate governance standards; infrastructure development and related financial services; and education of investors.

In 2023, the stock market continued to affirm its role as an effective capital channel for the Vietnamese economy. Despite many challenges and difficulties from the world and domestic economic context, capital mobilization through the stock market last year reached VND418.27 trillion ($16.97 billion), an increase of 33.5% compared to 2022.

Closing the Thursday trading session, the VN-Index, representing the HoSE, stood at 1,256.48 points. It was up 0.17% to 1,254.62 at 10:26 Friday.