Investor awareness key to Vietnam’s stock market status upgrade: regulator

The Investor introduces the speech by Vu Thi Chan Phuong, chairwoman of the State Securities Commission (SSC), at the seminar "Raising investor awareness towards stock market status upgrade" in Hanoi on Thursday.

Today, I am honored to participate in the seminar "Raising investor awareness towards stock market status upgrade". This is a highly meaningful event that contributes to the development of Vietnam’s stock market, reflecting the strong interest from policymakers, the media, the business community, and investors, especially in the context of the market’s status upgrade roadmap.

In recent years, Vietnam’s stock market has experienced robust growth in terms of scale, liquidity, and the quality of listed products, gradually becoming a key medium- to long-term capital mobilization channel for the economy.

As of the Wednesday session, the 10-day average liquidity of Vietnam’s stock market ranked first in Southeast Asia. This is a crucial indicator for market development, as foreign investors, especially institutional investors, closely observe not only market mechanisms and policies but also liquidity levels when making investment decisions.

If the market can attract substantial foreign indirect capital, particularly from large institutional investors and investment funds, it will generate significant positive effects for the stock market, further enhancing its role as a capital mobilization channel to support national socio-economic development.

Among the strategies to attract foreign capital, international experience has shown that upgrading the stock market classification is highly effective. Recognizing this, in 2022, the government issued Resolution 86 on developing a sustainable, transparent and safe capital market, setting a clear goal of turning the stock market into a main channel for mobilizing medium- and long-term capital and accelerating necessary measures to upgrade Vietnam’s market status from "frontier" to "emerging".

In 2023, the government approved Decision 1726 on the development of the stock market through 2030, with the goal of achieving "emerging market" status by 2025. Most recently, Resolution 68 on private sector development reiterated the urgency of market status upgrading and restructuring to ensure a stable capital channel for private enterprises.

To implement these government resolutions and the stock market development strategy to 2030, under the strong guidance of the government and the Ministry of Finance, the SSC has formulated concrete plans and announced a roadmap to gradually meet key upgrading criteria.

Several critical circulars have been issued, including one that removes the requirement for foreign investors to have 100% of funds in advance before purchasing stocks, aligning with international practices. Experienced institutional investors are now exempt from pre-funding their orders.

Since May 4, the new trading system KRX has been operating smoothly, improving the trading experience for investors. Additional measures have also been introduced to facilitate foreign participation. The Vietnam Securities Depository and Clearing Corporation (VSDC) has created communication channels connecting investors, custodian banks, and securities firms.

We also regularly hold investor access conferences to gather feedback and ensure that the market develops in line with international norms. The SSC and stock exchanges frequently meet with global index providers to share updates, exchange experiences, and collect insights from foreign investors.

Moreover, the State Bank of Vietnam has recently amended Circular 03 to replace Circular 05, simplifying the process of opening accounts for foreign investors.

We have also established a policy dialogue group conducting regular exchanges with foreign investors and funds to resolve regulatory bottlenecks. These initiatives reflect Vietnam’s strong commitment to global integration and sustainable market development.

Market status upgrade is not only the responsibility of regulatory bodies but also a shared obligation of all market participants. Beyond technical standards, the experience of foreign investors in Vietnam’s stock market is a key determinant in the upgrade assessment. While we work to improve mechanisms and remove policy obstacles, investor experience remains a critical factor.

Brokerage firms play an essential role in this process, as they are the service providers through whom foreign investors access the market. Therefore, ensuring a transparent, efficient, and high-quality market requires joint efforts from all stakeholders, including brokerages and listed companies.

We call on securities firms to enhance service quality, ensure transparency and improve investor experience. Listed companies should also ensure strong corporate governance and dual-language disclosures. Limited disclosure in Vietnamese only continues to pose challenges for foreign investors.

Meanwhile, domestic investors need better financial literacy to contribute to market stability. This is a long-term orientation for building a sustainable and integrated stock market.

Investors are at the heart of the stock market. A healthy, vibrant market cannot exist without active investors. Investor education and awareness-raising campaigns are vital to ensuring responsible and high-quality capital flows.

Vietnam’s stock market is still dominated by individual investors, who currently account for over 90% of trading activity. While this contributes to market vibrancy, it also introduces volatility and uncertainty. Many retail investors are puzzled by daily fluctuations. Despite a more diverse investor base, including foreign and institutional investors, this remains a key challenge.

As a result, it is essential to promote investor education and awareness raising, restructure the investor base, and foster the development of professional investment funds. At the SSC, we are currently finalizing two critical initiatives: the investor education project and the investor base restructuring project, both set for rollout this year.

Under the restructuring plan, we aim to grow the funds to reach 6% of GDP - equivalent to about $29 billion. Our vision includes strengthening regulatory frameworks, diversifying fund types, enhancing fund capacity, and expanding distribution channels through digital and fintech platforms. These efforts will help reduce speculative behavior and build a more stable, long-term capital flow.

Developing the fund industry will also help Vietnam meet criteria for market status upgrade and maintain its upgraded status. Ultimately, market reclassification is not the end goal but part of a broader journey - one that demands continuous trust-building at home and abroad to shape a modern, transparent, and globally integrated capital market.”