Pre-funding requirement to be eased for foreign stock investors

The Ministry of Finance will offer competent authorities a feasible solution to the pre-funding issue for investors, especially foreign ones, said Deputy Minister Nguyen Duc Chi on Thursday.

Fixing the pre-funding issue as recommended by international stock market rating organizations is one of the conditions for upgrading the Vietnamese market from “frontier” to “emerging”, he said at a regular government meeting.

“This is a very important task for 2024", stressed the deputy minister.

According to current regulations, foreign investors must set up a fully funded account before they start trading, a barrier that needs to be resolved if Vietnam wishes to upgrade its stock market by 2025.

Chi went on to say that another important task for the ministry this year is to meet the requirements of international stock market rating organizations on the ownership ratio of foreign investors in listed enterprises.

On this issue, the finance ministry has coordinated closely with the Ministry of Planning and Investment so as information could be published in the clearest and fullest way in both Vietnamese and English across all channels. In addition, it will require listed firms to update and disclose information in the clearest way, making the ownership ratio of foreign investors in listed enterprises transparent, he added.

“Businesses listed on the stock market must disclose information about their business situation in both Vietnamese and English in the first half of 2024,” he noted.

The deputy minister further said that the ministry will proactively put a new securities trading system provided by the Korea Exchange (KRX) into operation as soon as possible and ensure the requirements of depository payment transactions on the stock market.

However, according to Chi, Vietnam's market upgrade by international organizations depends heavily on other legal regulations. "In any solution, the Ministry of Finance must manage risks, especially systemic risks, and ensure the stable, safe and sustainable operation of the market," he affirmed.

Vietnam's benchmark VN-Index rose 0.75% to 1,173.02 points Thursday, with trading value on the Ho Chi Minh Stock Exchange (HoSE) dropping 34% to VND15.28 trillion ($625.72 million).

Foreign investors were net buyers on the HoSE to the tune of VND61 billion ($2.5 million), mainly net purchasing PNJ of Phu Nhuan Jewelry and HPG of steelmaker Hoa Phat Group.