Foreign securities firms get go-ahead

The Ministry of Finance (MoF) is hurrily drafting new policies to promote the stock market and attract more foreign capital, Ha said.

Acknowledging the expansion of foreign ownership rights had been long delayed, Ha stressed that both the MoF and the State Securities Commission (SSC) were eager to see new regulations become a reality this year, including the amended rules on the derivative stock market and the revision of Decree 58 detailing and guiding the implementation of certain articles of the Securities Law.

Ha noted that the lack of diversification of securities products and the low quality services provided by securities companies were holding back the development of Vietnam’s stock market.

He said these drawbacks would be tackled this year thanks to the completion of a legal framework and the restructuring of the stock market.

Listed companies will be categorized into groups subject to allowing more foreign ownership or prohibiting foreign investment, he said, adding that there would be a specific roadmap for foreign ownership expansion in Vietnam’s stock market.

Particularly, Ha said foreign investors would be able to own 100% stakes at securities or fund management companies if they met conditions provided by such specific laws as the Law on Credit Institutions, or Vietnam’s commitments to the WTO.

HCM City Securities Corporation deputy general director Trinh Hoai Giang said tempting more foreign investment was crucial to the development of the stock markets, and experiences from regional countries had shown that the inflows of foreign funds would be paved once the restrictions on foreign ownership were addressed.

He suggested that local authorities should consider permitting the issuance of non-voting depository receipts (VNDR) to provide an alternative option for foreign investors who wanted to invest above the current 49% cap.

Ha added that the Hanoi and HCM City Stock Exchanges will be merged in a bid to re-organise the transaction system and strengthen the governance and transparency in the stock market, while insurance funds, investment funds and voluntary pension funds are supported to develop to create a stable groundwork for market operations.  

At the same time, the MoF will also reshuffle securities companies and fund management firms. After two years of restructuring, the number of securities companies has been cut to 80 from a previous 100.