Strategic positioning vital to upgrade Vietnam

Vu Thi Chan Phuong, chairwoman State Securities Commission

Despite the global economic and political instability, Vietnam has shown remarkable adaptability. The past year witnessed a global inflation rate that was lower than predicted in developed economies but remained high, tightened monetary policies, persistent exchange rate pressures, and increased climate change challenges. These factors collectively contributed to the hardships faced by consumer demand and economic activities globally.

Vietnam, in this challenging scenario, has managed to sustain a favourable economic and social climate, achieving significant milestones. Key economic indicators, such as deposit and lending interest rates, witnessed a reduction of 2 to 3 per cent, while the budget revenue exceeded the forecast by 6.75 per cent.

A significant development in 2023 was the operation of a separate trading system for individual corporate bonds, fostering a sustainable, fair, transparent, and open development of the corporate bond market.

The SSC’s annual foreign investment promotion programme involved organising international cooperation activities and investment promotion conferences in various formats, including bilateral meetings and exchanges with foreign investors.

The SSC also spearheaded a series of global conferences to boost foreign indirect investment. Highlights included a Luxembourg roundtable on green capital markets, a Hong Kong conference with the Asian Securities and Financial Markets Association, the World Bank discussing Vietnam’s market potential, a pivotal Nasdaq panel discussion, and a conference in Los Angeles, all drawing significant international interest.

Vietnam is strategically positioning its stock market to attract substantial foreign investment by upgrading its status from a frontier to an emerging market, ideally before 2025. As of September 2023, Vietnam remained on FTSE Russell’s watch list for elevation to a secondary emerging market. The SSC is diligently working with ministries, international rating agencies, and market stakeholders to address the critical aspects of this upgrade.

One of the primary focus areas includes the pre-funding of transactions. The SSC, along with market participants, is exploring solutions to this challenge and reviewing securities legislation to ensure timely compliance with international standards.

Foreign ownership limits are another area under scrutiny. The MoF is liaising with the Ministry of Planning and Investment to reassess foreign participation limits in various sectors. The aim is to make this information more accessible to international investors, focusing on strategic sectors that impact national security.

The SSC’s proactive approach extends to refining regulations around public companies’ announcements of foreign ownership ratios. A push towards bilingual disclosure – in Vietnamese and English – particularly for larger listed companies, is set to increase the transparency and accessibility of vital market information for global investors. These concerted efforts are aimed at meeting FTSE Russell’s criteria for an upgrade, as part of a broader objective to foster a more accessible and attractive market for international investors.

In 2024, the SSC is poised to implement a series of measures to transform the stock market into an effective medium for long-term capital mobilisation. These include enhancing the legal and policy framework, linking initial public offering issuance with stock market listings, and augmenting market supervision and technological infrastructure. We are also preparing to host the 2025 Asia-Pacific Regional Securities Commission Conference in Vietnam.

Vietnam targets market upgrade to boost global investment profile Vietnam's government and financial regulators are actively pursuing reforms to meet international settlement standards, aiming for an upgrade from a frontier to an emerging market to attract significant global investment and strengthen the nation's credit standing.

Vietnam’s stock market poised for growth this year Over the past 23 years, Vietnam’s stock market has demonstrated a remarkable trajectory of resilience and growth, despite facing periods of intense volatility. The VN-Index, in particular, has shown a remarkable ability to bounce back, especially after the significant downturn of 2008, witnessing a decade of growth thereafter