Vu Thi Chan Phuong, chairwoman of Vietnam's State Securities Commission

Vu Thi Chan Phuong, chairwoman of Vietnam's State Securities Commission (SSC) presided over a conference in Conrad, Hong Kong titled "Unlocking the Potential of Vietnamese stock market – Heading towards an emerging market position" on August 29.

The conference, a collaboration between the Asian Securities and Financial Markets Association (ASIFMA) and supported by the World Bank Group, was instrumental in its dialogue centred on charting the trajectory for Vietnam’s stock market elevation.

"We're committed to Vietnam’s vision of advancing its stock market status. Our government's strategic plans until 2025 and even 2030 have already incorporated this goal," Phuong said.

Among the prominent attendees were leaders from the Ministry of Finance, State Bank of Vietnam, Ho Chi Minh Stock Exchange, Vietnam Securities Depository and Clearing Corporation, and the Vietnamese Consulate in Hong Kong. Furthermore, representatives from major investment banks, asset management companies, securities firms, and international rating agencies like FTSE Russell and MSCI graced the event.

Phuong said: “This conference offers an invaluable opportunity to interact, understand investor sentiments and engage with international rating agencies on actionable solutions to achieve our market elevation objectives.”

The chairwoman emphasised how various Vietnamese government arms, in recent years, have shown increased vigour and dedication in speeding up the nation’s market upgrade journey.

"Legal frameworks such as the Securities Law 2019 and Investment Law 2020 have been pivotal, facilitating foreign investment inflows, ensuring transparency, and setting conditions for robust market growth," she added.

She went on to laud the increasing transparency of the Vietnamese stock market, highlighting that 100 per cent of businesses in the VN30 Index have now made their information available in English. Moreover, key measures to support the market upgrade have been distinctly outlined in Decree No.155/2020/ND-CP and Circular No.96/2020/TT-BTC.

"Our efforts in revising legal frameworks and implementing pragmatic solutions have indeed created a more welcoming environment for foreign investors in Vietnam," Phuong said.

While significant progress has been acknowledged by international rating agencies and financial institutions, two pivotal challenges have been identified: pre-transaction deposit requirements (prefunding) and foreign ownership limits.

According to investors, to achieve the upgrade, Vietnam needs to implement the central counterparty model (CCP) as stipulated in Decree 155/2020/ND-CP. The solution of a CCP system, where custodian banks act as clearing members alongside securities firms, has been cited as an optimum solution to address the prefunding issue.

“If we don't address the prefunding concern, our journey towards a market upgrade might hit significant roadblocks," said an international investor at the conference.

Phuong said that while awaiting the CCP's introduction, interim technical solutions are being explored to alleviate foreign investor concerns about pre-transaction deposits. In the long-term, implementing the CCP is imperative. However, this requires the green light from the State Bank of Vietnam.

At the conference, Lyndon Chao of ASIFMA offered his insights into the growing dynamism of Vietnam’s economy.

"Vietnam is and continues to be one of the fastest-growing economies in Asia, if not the fastest-growing globally. The country stands to benefit immensely from global supply chain diversification and an exponentially growing middle class," Chao said.

According to research by McKinsey, almost 70 per cent of Vietnamese customers hold an optimistic outlook towards their future.

“Global investors are increasingly turning their attention to Asia. With Vietnam’s market reform efforts, the country shines as a prominent future investment destination in Asia, providing easier access for global fund managers,” Chao added.

During the conference, the investment community expressed high regard for Vietnam’s stock market and showcased a keen interest in exploring more investment opportunities in the nation. Investors' primary concerns revolved around the continuation of promoting a transparent and robust capital market that further facilitates foreign investment.