Vietnam’s capital markets have been in the headlines in recent months, and not always for the right reasons. In the two years since March 2020, Vietnam’s benchmark MSCI index has more than doubled. But then came a string of high-profile arrests, starting with billionaire Trinh Van Quyet, through major stockbrokers, property developers and even regulators.
Reuters reported that these caused a $40 billion wipeout for Vietnamese stocks and rattled investor confidence at a time when they were already spooked by rapidly rising US rates, as well as the war in Ukraine and other geopolitical tensions. However, there are indications that this could be a temporary blow. Craig Martin, executive chairman of Vietnam-focused fund manager Dynam Capital, told Reuters that while he expects scrutiny and caution from property developers and deals, the country’s growth is likely to remain intact. .
These measures are not the only ones taken by the government to make investing in Vietnamese markets more attractive. According to Benjamin Yap, Senior Partner at RHTLaw Vietnam, the government is also trying to perfect the legal system with recently released legal documents such as the “Amended Decree on Administrative Violations in the Securities Industry, which came into effect on January 1. , the decree on private placement and corporate obligation and many other government instructions on supervision and investigation for close control.
Infrastructure is another priority, especially “efficient and secure transactions and payments,” Yap says. “The market needs a platform to collect and share information quickly and reliably, including information on stocks, companies, prices and trades, etc. This makes the market more transparent; and is a necessary condition for the proper functioning of the market. For the corporate bond market, the rating agency is an important part of the information infrastructure. Credit rating should be promoted in Vietnam,” he notes.
The government, Yap says, is “urgently implementing and assessing issues and gaps in securities law provisions” in policy documents, including in framework laws such as the Securities Act .
“The Securities Law is the highest legal document that consolidates market operators. This will be the basis for new product launches, opening the door for market upgrading,” he said.
At the same time, the government is continuing to implement its stock market restructuring project.
“In the future, the government will direct business units to implement plans to inspect and supervise public companies, securities trading organizations and auditing firms whose clients have financial statements, that there is a deviation or error according to the approved plan, so it is foreseeable from the above that the government is trying to improve the legal system with emphasis on supervision and inspection of listed companies for transparent transactions to protect investors and create a competitive capital market environment,” says Yap.
The regulatory changes, he says, also focus on the disclosure obligations of listed companies.
“The government is working on finding solutions to prevent listed companies from trading shares without disclosing information before trading, proposing solutions for technical blocking, as well as proposing amendments to relevant regulations on trading,” says -he.
As the government focuses on fine-tuning legislation and processes, Yap says potential benefits for Vietnam include stable development of the country’s capital market and stable macroeconomic situation and approval of the economic stimulus package. . But he says more needs to be done to achieve this, including “solutions for the new information technology system. In particular, the T+0 day trading mechanism.
Although the ambition is exciting, Yap admits that the Vietnamese market is still relatively young and therefore “mistakes are likely to happen, but what is more important is how Vietnam can learn from it. lessons and develop in the future. Investors can see that the government is trying to improve the legal system and also the capital market mechanism for a transparent transaction environment,” Yap says, noting that although he does not has not been officially recognized as an emerging market, “the domestic market has achieved many benchmarks such as liquidity surpassing that of many other emerging markets in 2021, ranking only second in ASEAN after Thailand.
“Many large funds in the world specializing in investing in emerging markets have also started to appear in Vietnam,” he says.