Since the establishment in 2000, high hopes for the Vietnam stock market has continuously faded since the initial bull run that lasted a year or more.
Nguyen Doan Hung, vice chair of the State Securities Commission said at a seminar in Hanoi on January 12 that the SSC set this target to accelerate the development of the Vietnamese stock market to 2010. “Speeding up the equitisation and issuing securities in public is a vital requirement to reach this target,” said Hung.
Hung remarked that presently, there are still a slew of difficulties and obstacles slowing the process of tying the equitisation with the stock market. So, according to Hung, the SSC in conjunction with the government and relevant ministries must devise and materialise specific policies and measures in purpose of gearing up the equitisation process of state-owned enterprises.
Hung said that in the next five years, the SSC is expected to establish a corporate bond trading market to help companies borrow long-term loans instead of being dependant on sources of short-term bank loans, minimising risks for the local banking system.
“To be able to do this job, the SSC is planning to establish one credit rating organisation soon and then select some state-owned corporations or large state companies thirsty for long-term capital to build the scheme and issue corporate bonds,” said Hung.
The HCM City Securities Trading Centre (HSTC) will develop as the Vietnam Stock Exchange in the 2006–2007 period. This stock exchange will be directly task with approving the listing of shares/bonds on the bourse rather than the SSC is doing this job presently. Under the plan for developing the Vietnamese stock market to 2010 by the Ministry of Finance, the HCM City Stock Exchange also will connect to stock exchanges of the Asean countries, firstly Singapore Stock Exchange.
With the probable birth of the Hanoi Stock Trading Centre sometime this year, this OTC market will be a good environment and firm foothold for unlisted shares to trade. Together with continuously strong changes, the SSC is also issuing appropriate policies and measures to unroll red carpets for investment organisations or large investors to join the local bourses and enhance the close protection of investors.
According to Hong Kong Shanghai Banking Corp (HSBC), a vital measure to develop the Vietnamese stock market in coming years is Vietnam must seek ways to make most conveniences for foreign investors to undergo their purposes of transferring money into Vietnam, making profits and taking the profits abroad.
HSBC said that what foreign investors want most in the Vietnamese market is stability of government policies when they pump money in the country, especially policies related tax and forex administration.
Although the SSC says it is consistently working with the HCM City People’s Committee to accelerate the development of the bourse, It would appear that every plan to popularise the picture of the stock market only is focused on joint stock companies and local investors, but not foreign investors, especially institutional investors.
HSBC claimed that when organising shareholders meetings, most listed companies do not prepare official documents in the English language even though they also have foreign shareholders. “To be honest, even, most Vietnamese securities companies do the same job as listed companies: Not a single joint stock company has information in English on its website,” said a HSBC official recently.
Foreign-invested organisations are the experienced international financial ones and will be factors to bring the necessary stability for the local stock market, including the psychology of local investors. Urgently, instead of developing the stock market in silence as presently, Vietnam should quickly deploy a specific strategy to attract foreign investors to join the local bourse.