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VET interviewed Mr. Tran Van Dung, Chairman of the State Securities Commission (SSC), just prior to the April 16-20 Investment Promotion Conference in South Korea.
by Lan Huong - Linh San
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Vietnam’s stock market has witnessed the highest net foreign investment flows ever. How would you assess stock market investment from South Korea?
The stock market continued to be an attractive destination for foreign direct investment (FDI) in 2017. Total investment from foreign investors as at the end of the year was $32.9 billion, an increase of 90 per cent compared to the end of 2016. In the first three months of 2018, foreign indirect investment (FII) continued to rise and the foreign portfolio value reached $37.6 billion by the end of March, up 14 per cent compared to the end of last year. We are happy to see that indirect investment from South Korean investors is growing strongly, though it’s quite modest compared to potential. We now have 4,846 South Korean investors in the stock market.
There are five South Korean-invested securities companies in the country: Korea Investment & Securities, Mirae Asset Daewoo, Shinhan Securities Vietnam, KB Securities, and Woori Securities. These companies, commercial banks, and representatives of South Korean fund management companies have played an important role in connecting and bringing South Korean indirect investment capital into Vietnam over recent times.
South Korea also has a number of important cooperation projects with Vietnam in the securities sector. Vietnam’s two stock exchanges and the Vietnam Securities Depository are trying to improve technology with assistance from the Korea Securities Exchange. We are talking to the Association of Korean Financial Investors (KOFIA) about the signing of a memorandum of cooperation on financial technology.
What are your thoughts on attracting foreign investment capital into the stock market?
As foreign capital flows help Vietnam’s economy and its stock market to develop, the government and the Ministry of Finance have implemented a host of solutions in the past few years, such as completing the network of institutional investors, especially professional investment institutions such as investment funds, and forming and operating investment funds in line with international practice, such as closed-end funds, open-end funds, member funds, securities investment companies (a legal entity fund), real estate investment funds, and exchange-traded funds (ETF). We also removed foreign ownership limits in non-conditional sectors, under Decree No. 60/2015/ND-CP, allowing foreign investors to invest in an unlimited number of bonds, minimized administrative procedures for foreign investors when issuing trading codes and issuing online trading codes in accordance with Circular No. 123/2015/TT-BTC, and promoted information disclosure in English for management agencies and listed companies.
The restructuring of State-owned enterprises (SOEs) through equitization and divestiture has also been promoted by the government, creating a source of quality goods for the stock market. The government has issued many policies and solutions to solve problems in the implementation process, such as further reducing the proportion of State ownership in equitized SOEs listed and registered for trading on the stock market. Over recent years, many leading SOEs and large corporations have equitized and listed, pushing up interest from foreign investors (many of which are from South Korea) in the initial public offerings (IPOs) of major SOEs.
What would you suggest be done to attract more investment from South Korea into Vietnam’s stock market?
Financial investment from South Korean investors in Vietnam has increased dramatically in the past year but not matched potential. Opportunities in Vietnam are, however, wide open, and South Korean investors should not ignore this moment.
Demand for capital for development investment in Vietnam is huge, and its stock market must develop more strongly to assume the role of providing medium and long-term capital to the economy.
From the SSC’s perspective, we will strive to attract FDI into Vietnam, with five main solutions. Firstly, we will build a stable, safe, fair, open and effective stock market, to protect the interests of investors and respect market rules, gradually integrating with other stock markets in the region and the world. Secondly, we will further accelerate the listing of large-scale equitized SOEs and reduce State ownership to bolster attractiveness. Thirdly, we will diversify products on the stock market (covered warrants, government bond futures, options contracts, new stock indexes) to ensure that foreign investors have more investment opportunities and a range of investment products in accordance with investment needs and time limits. Fourthly, we will implement solutions to upgrade Vietnam’s stock market from the group of marginal stock markets to the group of developing stock markets in the MSCI Vietnam Index. And fifthly, we will strengthen the close cooperation with South Korean management agencies to meet and exchange information in order to understand the investment needs of South Korean investors. The two sides will jointly develop solutions to resolve problems facing South Korean investors when investing in Vietnam’s stock market.
- stock market