ASIFMA highlights Vietnam stock market's emerging status

During a bilateral meeting between the ASIFMA and the State Securities Commission of Vietnam (SSC) at the 48^th Annual Conference of the International Organisation of Securities Commissions, insightful discussions unfolded from June 13-15.

Accordingly, SSC chairwoman Vu Thi Chan Phuong provided a comprehensive update on Vietnam's macroeconomic landscape and its specific investment potential in the stock market.

ASIFMA CEO Alice Law, along with other members, engaged in a productive exchange on recent market developments and the envisioned green and sustainable trajectory of Vietnam's capital market.

The ASIFMA delegation, consisting of institutional investors, securities service providers, market rating agencies, global custodian banks, securities depositories, law firms, and brokerage companies operating in Asia, expressed keen interest in Vietnam's stock market.

Recognising its immense growth potential, they emphasised the need to elevate Vietnam's market from frontier to emerging status, which would unlock a host of investment opportunities.

However, despite the positive outlook, foreign depository banks highlighted a significant challenge they hope to overcome. The requirement for pre-trade margin and securities lock-up has emerged as a bottleneck, hindering the smooth functioning of the market.

To address this concern, ASIFMA members propose a mechanism for securities settlement guarantee activities or the provision of short-term credit limits for foreign investors engaged in securities transactions.

Law, aims to facilitate open dialogue between regulatory authorities and investment organisations, encouraging the exchange of ideas and the proposal of solutions that would pave the way for Vietnam's stock market to attain emerging status.

"ASIFMA member depository banks believe that there should be a specific mechanism for securities settlement guarantee activities or the provision of short-term credit limits for foreign investors engaged in securities transactions," said Law.

Both ASIFMA and SSC agreed to collaborate with the World Bank to organise a thought-provoking panel discussion in August 2023, to be held in Hong Kong. This gathering will focus on the crucial aspects of upgrading Vietnam's stock market and coincide with the SSC's visit to FTSE Russel and MSCI rating agencies.

Sustainability also took centre stage during discussions, with the ASIFMA offering to share practical experiences from developed capital markets regarding responsible investments, green bond issuance, sustainable development practices, and the disclosure of environmental, social, and governance information by public companies.

The meeting concluded with a shared understanding that there is still work to be done to foster sustainable development in the regional capital market and maintain Vietnam's market appeal for financial services and foreign investors' confidence.

The ASIFMA, an independent regional trade association, boasts around 170 member companies, including more than 50 multinational banks, over 40 asset management and institutional investor firms, and a range of stakeholders from the entire financial infrastructure of the region.

The association has put forth numerous initiatives, including consultations with regulatory authorities, the development of unified industry standards, advocacy for market improvements through policy papers, and cost reduction efforts in the region.

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