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Tightening stock market management in order to absorb foreign capital inflows

14:26 | 06/12/2016

VCN - Experts said that the stock market needs "a rule" that ensures transparency, thereby helping to attract foreign capital sustainably and more efficient.

tightening stock market management in order to absorb foreign capital inflows The Prime Minister notes 6 key tasks of stock market development
tightening stock market management in order to absorb foreign capital inflows The stock market should increase the "quantity" and "quality" to absorb foreign capital
tightening stock market management in order to absorb foreign capital inflows Over 146 foreign investors are granted the stock transaction code

tightening stock market management in order to absorb foreign capital inflows The violations in the field of securities are increasing and becoming more and more sophisticated. Photo: N.Hien

According to data of the Viet Nam Securities Depository (VSD), from early 2016 to the end of October, VSD has granted 1,383 trading codes for organizations and foreign individuals. Thus, on a daily average, the Viet Nam stock market welcomed about 4 more new investors from abroad.

Typically, within the first 10 months of 2016, SSI Asset Management (SSIAM) raised $US 100 million from foreign investors into the stock market of Vietnam. The total new capital raised for Andbanc Investments SIF fund - Vietnam Value and Income Portfolio (primarily investing in listed shares), Daiwa -SSIAM Vietnam Growth Fund II LP (invests in private companies) and SSIAM UCITS (investment shares listed). In particular, the new UCITS fund SSIAM came into operation from 11 October.

A survey of the business environment index in the 3rd quarter which was carried out by European Enterprises Association in Vietnam (EuroCham) for nearly 200 enterprises of European countries investing and having production activities in Vietnam also showed that most of surveyed companies intend to maintain the level of investment, accounting for approximately 41%. Along with that, there is also 39% of enterprises said that they intend to increase investment and 17% are planning to increase investment significantly. The number of enterprises who responded todivest is very limited, less than 1%, significantly fall from the previous quarter of 7%.

According to assessment of experts, Vietnam's stock market is now getting the attention and high appreciation from international investors, especially institutional investors. The reason is that GDP growth is consistently high, political stability, infrastructure is gradually improving and the Government's efforts in reforming the economy.

However, experts also said that the chances of absorbing foreign capital for the Vietnam stock market will be greater if Vietnam expands the scale and improve market ranking from frontier markets to emerging market.

Mr. Dominic Scriven, Chairman of Dragon Capital said, many investment funds in the world want to pour capital into Vietnam but have encountered difficulties due to small market size.

Additionally, according to Mr. Tran Van Dung, Chairman of Ho Chi Minh City Stock Exchange Department (HOSE), a survey by HoSE and Stoxplus made of 115 investment funds, of which 75 funds are managing $US 2,400 billion (allocated on Vietnam stock market $US 10.8 billion) showed that 83% of those said that they would increase the scale of investment in Vietnam when the stock market ranking was upgraded to emerging markets. In particular, more than half of them said it would increase the size investment in Vietnam up to more than $US 10 million.

Over the past time, the State Securities Commission has shown great effort in upgrading the market by issuing a series of documents and policies to support the market. Typically such as the provisions of loosening room for foreign investors in Decree 60, the regularization of listing operation of companies after equalization in Decree 145 ... However, in order to attract foreign capital in a truly sustainable way, besides supply increasing solutions, Vietnam stock market should also improve the quality of the goods on the market. According to experts, Vietnam needs to renovate "a rule" with the higher regulations and standards which are suitable for the development of the stock market.

Chairman of the State Securities Commission, Mr. Vu Bang also admitted that in the sanctioning of violations of securities field, although the experience of the management agencies has increased a lot, but the violations are also increasingly sophisticated. In addition, the administrative sanctions of Vietnam's stock market are still slight.

The reason is that the authority of the State Securities Commission in the inspection and handling of violations is limited. The access to bank accounts, e-mail of enterprises and individuals... to detect violating traces faced many difficulties. The State Securities Commission has repeatedly applied this additional competence on securities law but has not been approved.

Mr Bang said, in the incoming period, when conducting amended the upcoming Securities Law, State Securities Commission will continue to make this recommendation.

tightening stock market management in order to absorb foreign capital inflows Developing new products and enhancing the value of businesses to attract investment

VCN- In order to develop the market and attract capital inflows into the market in a sustainable ...

Regarding auditing standards, Mr. Tran Dinh Cuong, CEO of Ernst & Young said that although Vietnam already had so many improvements but the gap in comparison with international operations is still big. Therefore, we should narrow this gap in order to improve the detection ability, counseling; at the same time, require listed companies to comply with the provisions on administration and financial transparency. In fact, there are only 30 auditing companies which are approved to audit for nearly 700 listed companies. This raises a great pressure that is making auditing work harder to achieve the thoroughness and exhaustiveness.

By Khai Ky/Tuan Cuong