Vietnam stock market will continue to grow in 2018

Mr. Tran Van Dung, Chairman of SSC

How do you assess the development of the stock market in the past and the prospects of the stock market in 2018?

Last year, Vietnam stock market had a great growth and is considered a bright spot to attract indirect capital flows compared with other countries in the region. VN-Index and HNX-Index rose respectively 48% and 46%, reaching the highest level in nearly the past 10 years.

In 2017, the stock market officially came into being, marking a new development of the Vietnam stock market in the process of completing the structure of the stock market and financial market of Vietnam. Since the opening, the scale of transactions is increasing showing the great attraction of the stock market. With the participation of a large number of investors, especially institutional investors and foreign investors, the growth of this market will be stronger in the future.

In 2018, the economy is on the rise, according to which Vietnam's economy is also expected to continue to grow and remain high for the next five years, while inflation is controlled below the expected level, the stable exchange rate of the interest rate, which is maintained at a reasonable level, will continue to actively support the development of Vietnam’s stock market in the coming time.

In addition, the policy of accelerating equitization and divesting will provide many quality goods for the market. According to the government plan announced in 2018-2019, equitization of 82 more enterprises, including many large enterprises such as Vietnam Paper Corporation, Mobifone, Vietnam Coffee Corporation, Post and Telecommunication Corporation, Chemical Group, Coal and Mineral Group etc.

As a result, the size of the market will grow sharply, while creating more high quality goods and more choices for investors, thereby attracting more foreign investors.

What are the factors that will help the market to grow next year?

In 2018, the State Securities Commission will have many synchronous solutions, in many aspects from the submission of the revised Law on Securities to the deployment of solutions to attract foreign capital flows, deploying many new products to bring in. The market (guaranteed security products, promissory notes, etc.) will increase investment opportunities, increase attractiveness and support, promote the market to develop more stably and with sustainability.

This year, when Decree 71/2017/ND-CP comes into effect, it is expected that there will be a big shift in the quality of corporate governance, which will help businesses to develop more sustainably and publicized news will also increase. The banking system is improving and there is a real change. Bank liquidity, foreign exchange reserves have improved a lot. This shows that the credit quality has increased, bad debt has been reduced and the management of the banking industry has similarly improved. At the same time, the stock market in Vietnam is becoming increasingly attractive to foreign investors.

What are the efforts of the Vietnamese stock market to upgrade to MSCI's emerging market?

According to Morgan Stanley Capital International (MSCI), the biggest hurdle in Vietnam's stock market is its marginal position with high risk. Therefore, the allocation of investment capital by international investment institutions in Vietnam accounts for a small proportion. In addition, the domestic stock market is modest in comparison with other regional and world markets, leading to modest liquidity, which affects the disbursement of large institutional investors. Therefore, the upgrading of the securities market will create confidence for foreign organizations, thereby attracting foreign capital, helping to improve liquidity for the market.

It should be emphasized, however, that the upgrading of the market rating does not depend on the subjective will of the regulators of any stock market in the world, because the assessment, classification and market rating of World rankings such as MSCI, FTSE Russell or S&P Dow Jones are subject to the principles, procedures and criteria of these organizations.

In general, quantitative criteria are not a big obstacle for Vietnam, as there are enough stocks in the market and more stocks are expected in the future. New qualitative criteria are the main barriers to Vietnam's upgrading. In addition, the assessment of MSCI is basically based on the opinion of foreign investors, most of the criteria are qualitative, so the application of policies/solutions of the management agency only is a factor, not a guarantee the Vietnam stock market will be upgraded.

In the coming time, what is the SSC's solution and policy to speed up this process?

At present, SSC has been focusing on deploying three groups of solutions to overcome difficulties and create favorable conditions for investors in the stock market in Vietnam including solving difficulties in increasing the ratio ownership of foreign investors (FDI); Strengthening transparency in the stock market, ensuring equal access to information of foreign investors and further cutting and simplifying administrative procedures to create favorable conditions, saving time and cost for investors in the stock market.

In addition, the State Securities Commission (SSC) is also working on solutions to address the requirements of transferability, securities lending, further refinancing of institutional and market infrastructure, and offering solutions for promoting and enhancing the image of Vietnam's stock market.

The derivative stock market has helped the Vietnam stock market to have a more complete structure, including capital mobilization market and risk diversification market, promoting the integration capital market, linked to capital markets in the ASEAN region.

In addition, new products such as warranted security expected to launch in the near future are also expected to create new development for the stock market. In addition, the SSC has been developing a scheme to restructure the market trading system by consolidating stock exchanges in order to improve liquidity, market size, technology infrastructure capacity and cost reduction to meet the needs of foreign investors as well as international standards.

The push for the implementation of policy measures to promote the upgrading of the Vietnamese securities market shows the efforts of the SSC and the Ministry of Finance to perfect and develop the market and attract foreign capital from foreign investors, contributing to promoting the process of restructuring and socio-economic development of the Government of Vietnam. However, the upgrading of Vietnam's securities market requires the cooperation of many ministries and agencies such as the Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment etc., the support of the Government of Vietnam as well as of market participants. The upgrading of the stock market has had a considerable impact on the financial sector in particular and the economy in general, which is the path leading Vietnam to further integrate into the playing field in the region and the world.

Thank you Sir!