Two investors watch stock indices on an e-board at a securities company. Information transparency is an indispensable requirement for the market to be upgraded. The more transparent financial information is, the more a business attracts the attention of investors. (Photo: VNA) Hanoi (VNS/VNA) — The goal of upgrading the stockmarket by 2025 requires the concerted efforts of ministries and market members.
In the frontier market basket of FTSE Russell, Vietnamese stocks account for 34%of market capitalisation, according to data updated on August 31, 2023. Withthe largest number of companies at 103 and 6 representatives in the top 10 bysize in the FTSE index basket, the frontier market basket seems to becomenarrow for the 23-year-old stock market.
While many markets are still struggling to meet the criteria forscale and liquidity to upgrade to emerging market status, the Vietnam stockmarket faces challenges related to foreign investor market access. In theSeptember 2023 market rating assessment, FTSE Russell continued to keep Vietnamon the waiting list for upgrading from a frontier market to an emerging market.
It has been almost was years since the country was included in the list.According to FTSE Russell, Vietnam’s stock market reform progress remains slow,although there have been commitments from high-level leaders.
Information transparency is an indispensable requirement for the market to beupgraded. The more transparent financial information is, the more a businessattracts the attention of investors, said economic expert Vo Tri Thanh.
The biggest policy "bottleneck" for Vietnamese stocks toachieve FTSE Russell's upgrade criteria is the expansion of "room"for foreign investors. State management agencies are looking for feasiblesolutions, Thanh said.
However, there are things that the policy allows, but listed businesses are notready to receive capital. For example, Decree 60/2015/NĐ-CP stipulates amaximum foreign ownership limit of up to 100%. But many businesses decided tolimit their foreign "room" to 0%, not welcoming foreign capital.
Upgrading the market requires the co-operation of many parties, not only fromministries and branches, but also from listed businesses themselves, accordingto Tran Viet Dung, Director of the Institute of Banking Scientific Researchunder Banking Academy.
However, many businesses have not voluntarily provided information. Fornon-mandatory requirements, such as disclosing information in English orapplying the IFRS accounting regime, only a few large enterprises comply.
Vu Duc Tien, General Director of broker SHS, said that awarenessin information disclosure is a must. Businesses need to understand thattransparent information disclosure is a right to attract capital. Toughermeasures on information transparency are needed.
An estimated 7.2 billion USD of indirect foreign capital isexpected to flow into the Vietnamese market, according to a World Bank report.Moreover, a higher-rated stock market also increases confidence among domesticinvestors, large-scale institutional investors, and diversifies the investorbase.
The market upgrade opens up opportunities to enhance the position and image ofthe Vietnamese capital market, improving the attractiveness and competitivenessof Vietnam’s economy in the regional and international arena, said Vu Chi Dung,head of the International Cooperation Department under the State SecuritiesCommission.
Dung said that a larger flow of indirect foreign capital can havea stronger impact on market volatility, both in terms of buying and selling,and psychological influence as well. The rapid increase in trading putspressure on the systems, requiring infrastructure stability./.
In the frontier market basket of FTSE Russell, Vietnamese stocks account for 34%of market capitalisation, according to data updated on August 31, 2023. Withthe largest number of companies at 103 and 6 representatives in the top 10 bysize in the FTSE index basket, the frontier market basket seems to becomenarrow for the 23-year-old stock market.
While many markets are still struggling to meet the criteria forscale and liquidity to upgrade to emerging market status, the Vietnam stockmarket faces challenges related to foreign investor market access. In theSeptember 2023 market rating assessment, FTSE Russell continued to keep Vietnamon the waiting list for upgrading from a frontier market to an emerging market.
It has been almost was years since the country was included in the list.According to FTSE Russell, Vietnam’s stock market reform progress remains slow,although there have been commitments from high-level leaders.
Information transparency is an indispensable requirement for the market to beupgraded. The more transparent financial information is, the more a businessattracts the attention of investors, said economic expert Vo Tri Thanh.
The biggest policy "bottleneck" for Vietnamese stocks toachieve FTSE Russell's upgrade criteria is the expansion of "room"for foreign investors. State management agencies are looking for feasiblesolutions, Thanh said.
However, there are things that the policy allows, but listed businesses are notready to receive capital. For example, Decree 60/2015/NĐ-CP stipulates amaximum foreign ownership limit of up to 100%. But many businesses decided tolimit their foreign "room" to 0%, not welcoming foreign capital.
Upgrading the market requires the co-operation of many parties, not only fromministries and branches, but also from listed businesses themselves, accordingto Tran Viet Dung, Director of the Institute of Banking Scientific Researchunder Banking Academy.
However, many businesses have not voluntarily provided information. Fornon-mandatory requirements, such as disclosing information in English orapplying the IFRS accounting regime, only a few large enterprises comply.
Vu Duc Tien, General Director of broker SHS, said that awarenessin information disclosure is a must. Businesses need to understand thattransparent information disclosure is a right to attract capital. Toughermeasures on information transparency are needed.
An estimated 7.2 billion USD of indirect foreign capital isexpected to flow into the Vietnamese market, according to a World Bank report.Moreover, a higher-rated stock market also increases confidence among domesticinvestors, large-scale institutional investors, and diversifies the investorbase.
The market upgrade opens up opportunities to enhance the position and image ofthe Vietnamese capital market, improving the attractiveness and competitivenessof Vietnam’s economy in the regional and international arena, said Vu Chi Dung,head of the International Cooperation Department under the State SecuritiesCommission.
Dung said that a larger flow of indirect foreign capital can havea stronger impact on market volatility, both in terms of buying and selling,and psychological influence as well. The rapid increase in trading putspressure on the systems, requiring infrastructure stability./.
VNA
