SSC prioritises stabilising solutions for stock market

Vietnam's stock market is in a strong correction, down nearly 19 per cent since its peak in early April.

Viet Nam's stock market is in a strong correction, down nearly 19 per cent since its peak in early April.

In a recent interview with Vietnam News Agency, a representative of the State Securities Commission (SSC) said that the domestic stock market was going through a strong adjustment period, due to the combined impact of domestic psychological factors as well as risks from the international market such as the Fed raising interest rates sharply, unresolved geopolitical tensions, inflationary pressures, sharp increases in input prices and rising energy prices.

Although the Vietnamese stock market is still highly expected to recover and grow again in 2022 and in the following years, in the context of recent high volatility, the management agency is giving special priority to short-term solutions to help stabilise the market and reassure investors' sentiment.

"The State Securities Commission, the stock exchanges, and the Viet Nam Securities Depository Center have met with many market members and securities companies to assess the current situation as well as discuss solutions in both the short and medium-term for the market to overcome difficulties. This year, there will be changes in a positive direction, which is expected to support the market to increase liquidity, as well as improve transparency," said the representative.

As for medium and long-term solutions, the SSC's leaders said that the management agency is actively completing the legal framework for the stock market, perfecting the development of the stock market development strategy by 2030 to clearly define long-term goals, solutions and roadmap for market development.

SSC is reviewing, evaluating and summarising to recommend the shortcomings in the legal framework of the Law on Securities and the system of guiding documents on securities trading, especially regulations on transparency of corporate information, rights and responsibilities of participants, sanctions for violations on the market, thereby restoring confidence and trust of investors.

"In the near future, we will have more solutions to improve operational efficiency, service quality, financial capacity, and professional ethics of service providers in the market, especially securities companies, independent auditing companies, fund management companies, asset valuation companies, credit rating agencies, accounting and auditing companies," the representative said.

For foreign capital flows, in addition to solutions to attract the participation of foreign investors, the State Securities Commission is also accelerating solutions to shorten the process of upgrading Viet Nam's stock market from frontier to emerging status.

"Although the upgrade will depend greatly on market rating agencies, the State Securities Commission is coordinating with relevant agencies to agree on solutions, set out a clearer roadmap, and strive for higher standards. We hope that Viet Nam's stock market will be upgraded as soon as possible, achieving the target set by the Government.”

Previously, leaders of the Ministry of Finance in many public statements also said that the correction only lasted in the short-term, and that the Vietnamese stock market still had positive supporting factors such as a stable macroeconomy. In the future, Viet Nam's stock market will develop more strongly with better quality, affirming its role as the main medium- and long-term capital mobilisation channel of the economy and businesses.

Assessing the Vietnamese stock market from now until the end of 2022, many experts believe that the Vietnamese stock market still has a lot of growth potential when many positive factors continue to be maintained. The COVID-19 pandemic is still better controlled, the macro fundamentals are still firm, economic activities are restored, domestic consumption recovers, and international tourism activities are gradually reopened. These are very important factors for Viet Nam's GDP growth to reach 6.5 – 7 per cent.

Along with that, production and business activities of enterprises continued to prosper. In the first quarter of 2022, 86 per cent of listed and large-scale public companies registered for trading have announced profitable reports, higher than 83 per cent of the same period in 2021.

The number of newly opened securities accounts has continuously increased in recent years. In April 2022 alone, there were 231,275 newly opened securities accounts, bringing the total number of securities trading accounts to more than 5.2. million and currently accounts for about 5 per cent of the population.