Vietnam's stock market faces challenges, but positive liquidity outlook revealed

In a report delving into the realm of stock market development and stability solutions, the SSC conducted an evaluation of the stock market's outlook for the latter half of 2023, revealing a series of influential factors poised to positively impact liquidity.

However, the broader economic landscape of Vietnam in general, and the stock market in particular, are anticipated to grapple with a multitude of obstacles throughout the year.

To guarantee the seamless, stable, and transparent functioning of the market, while simultaneously propelling sustainable and transparent market growth, a set of five major solutions has been proffered.

Firstly, the SSC and its parent ministry, the Ministry of Finance (MoF), will continue to improve the legal and institutional framework. This includes reviewing existing regulations under the Securities Law and providing clear guidelines to address any shortcomings.

The aim is to define the activities and services offered by securities companies and implement additional regulations to better manage investors and enforce penalties for violations. These efforts aim to foster a healthy, transparent, and sustainable stock market.

Secondly, efforts will be made to expedite the implementation of the Korean Stock Exchange technology system, enabling the introduction of new products and services in the stock market.

Additionally, the MoF is working on establishing a separate trading platform for corporate bonds, fostering heightened transparency within the secondary market, as per regulatory agency requests.

Furthermore, the restructuring of the stock market and the improvement of market intermediaries will be pursued through the restructuring of securities companies and fund management firms.

In terms of market supervision and inspection, the SSC aims to strengthen the role of securities companies as first-line supervisors. This includes enhancing their compliance with regulations and the timely detection of market violations. Efforts will also be made to enhance the quality of human resources involved in inspection and supervision, utilising an upgraded transaction monitoring system with advanced analysis, alerting, and statistical features.

The SSC will closely watch both domestic and international market developments and collaborate with relevant agencies to strengthen market supervision, provide early warnings about risks, and conduct inspections and investigations to address violations. This will contribute to deterrence, regulatory improvement, and market discipline, fostering a transparent and sustainable stock market.

Efforts will also be made to improve communication by providing comprehensive, accurate, and timely information to investors, helping them access reliable sources and mitigating the negative impacts of rumours and misinformation in the market.

Lastly, it is pivotal to align with international organisations to orchestrate the cohesive implementation of measures aimed at expediting the upgrade of Vietnam's stock market, thereby enticing foreign investors to participate within the nation's marketplace.

FIEs remain reluctant to take on stock listing Despite the substantial contribution of foreign direct investment to Vietnam’s overall economy, the presence of foreign-led groups in the stock market remains disproportionately meagre and fails to reflect its true significance, experts point out.

Securities firms urged to upgrade strategies Securities firms operating in Vietnam’s highly profitable brokerage services sector catering to international clients and institutional financiers must elevate their service standards to attract discerning clients, as intensified competition necessitates enhancing capabilities to meet the demands of foreign investors.