Support Vietnam's stock market to be upgraded soon

DNHN - Up to now, based on the criteria required by the rating agencies, Vietnam has achieved many important criteria, however, there are still many criteria that require common determination and close coordination from the relevant ministries and branches…

Meet the criteria for market upgrade step by step

Recently, the Head of the Government of Vietnam has repeatedly mentioned the need to implement solutions to upgrade the stock market from marginal to emerging.

Experts recognize and say that upgrading the market means upgrading the quality to meet the set criteria. Since then, attracting a large amount of foreign capital, helping Vietnam's securities to develop quickly, transparently and sustainably.

The issue of market purification and capacity building of the transaction system is strongly directed by the Government. This shows Vietnam is determined to improve the quality of the stock market. Improving market quality to protect investors, opening opportunities for Vietnamese securities to upgrade from marginal to emerging.

In the past period, the stock market (stock market) had complicated movements, the VN-Index after a period of increase fell to approximately 1,200 points, equivalent to 2018. Based on these developments, Experts say that upgrading the stock market in 2022 is not feasible when the stock market is still complicated.

On the side of the Ministry of Finance, the ministry's leader said that upgrading the stock market is one of the big goals that Vietnam's stock market is aiming for. The roadmap for upgrading Vietnam's stock market from marginal to emerging has been included in the Project "Restructuring the stock market and insurance market to 2020 and orientation to 2025" and the draft "Strategy for development of the stock market to 2030" is submitting to the Government for consideration and promulgation. Accordingly, Vietnam aims to be upgraded from a marginal market to an emerging market before 2025.

According to Mr. Nguyen Minh Tuan - General Director of AFA Capital Investment Joint Stock Company, the criteria for upgrading from the frontier market to the emerging market focus on two main factors: size and liquidity of the market (quantitative) and market access (qualitative).

In terms of size and liquidity, there are four criteria including: number of companies included in the Standard Index, total market capitalization, floating capitalization and market liquidity calculated as an annual trading value ratio. Vietnam has almost met three standards.

This is also considered a necessary and sufficient condition for Vietnam to ensure quantitative standards. Vietnam's main problem is qualitative standards. In the latest ranking period in June 2021, there are nine criteria that Vietnam has not yet met.

The criteria are not met such as: ownership rate, restrictions on ownership and equal rights of foreign investors; the ease of capital mobility and the degree of freedom of the foreign exchange market; the depository and payment system still has the problem of order congestion, as well as overdraft tools, money advance for transactions; the ability to convert when there are transactions not through the floor and payment in kind must be approved in advance by the Securities and Exchange Commission.

It should be noted that the market upgrade does not depend on the subjective will of the management agency of any stock market in the world, because the assessment, classification and market rating of the rating agencies such as MSCI, or FTSE are subject to the principles, processes and evaluation criteria of these organizations.

Achievements

Over the past time, the management agency has been making great efforts and determination to promote and shorten the upgrade roadmap of Vietnam's stock market, which is shown through a number of results.

Regarding the legal framework, the Securities Law 2019 and guiding documents, the Investment Law 2020, the Enterprise Law 2020 have gradually met the criteria for market upgrading, including: Ownership ratio of investors foreign investment; create favorable conditions for investment capital flows; access to information; register and open an account for investors; clearing and settlement on the stock market; increase the introduction of new financial instruments into the market to diversify investment products.

Regulatory agencies regularly communicate with MSCI and FTSE Russell to update factual information so that organizations can accurately grasp, as well as clarify requirements and criteria from organizations, from there making revised and improved solutions.

Currently, based on the criteria required by the rating agencies, Vietnam has achieved many important criteria, but there are still many criteria that need common determination, close coordination from ministries, related industries to remove difficulties to help the market be upgraded soon in the near future.

Solve problems about upgrading the stock market

The Ministry of Finance said that in order to ensure a smooth connection with rating agencies, the management agency will continue to actively discuss and discuss with stakeholders about policies, market practices and related solutions. Most recently, on June 24, the State Securities Commission also worked with the World Bank and FTSE Russell to continue to solve problems in upgrading the stock market.

The Ministry of Finance (SSC) will actively discuss with agencies, ministries, branches, associations, market members and investors, especially the State Bank and the Ministry of Planning and Investment, to remove very important issues related to upgrading such as: foreign ownership rate or some regulations on the foreign exchange market...

Relevant ministries and branches should continue to coordinate with agencies to develop guiding documents of the Investment Law 2020, especially contents on industries, occupations and market access conditions for foreign investors; increase publicity and transparency on the rate of foreign ownership so that investors can access complete, prompt and timely information; research and introduce non-voting depository certificates (NVDRs) into the trading market.

The Ministry of Finance will focus on completing and operating a new information technology system for the stock market; thereby having an infrastructure foundation to develop, diversify and increase the quality of products on the stock market to attract foreign investors and related infrastructure; strengthening corporate governance, disclosing information on environment - society - governance (ESG) to increase stock quality; research and develop products related to green content and sustainable development.

Currently, the current regulations have been revised in the direction of reducing administrative procedures and increasing the application of technology in the market. Accordingly, one of the highlights is allowing registration of online transaction codes. Most recently, the Vietnam Securities Depository Center has also consulted on a draft regulation to replace the Regulation on clearing and settlement of securities transactions and the regulation on depository members. It is expected that in the coming August, the time for securities settlement and clearing will be withdrawn, investors can trade right in the afternoon of T+2.

Bảo Ngân (T/h)