Speaking at the Conference on Developing the Securities Market in 2024, Mr. Dominic Scriven, Chairman of the Board of Dragon Capital Vietnam, stated that the past two years, 2022-2023, have been quite challenging. However, with the leadership of the Government and the Ministry of Finance, the market has gradually recovered, with a 12% increase at the end of last year. Market members, investors, and listed companies have started to feel excited.
Mr. Dominic Scriven, Chairman of the Board of Dragon Capital Vietnam, speaking on “Harnessing the National Economic Strength: Solutions for Developing the Securities Market” – Photo: VGP/Nhật Bắc
According to Mr. Dominic Scriven, to imagine the potential for Vietnam, let’s look at the total global GDP of around $100 trillion last year, the market capitalization of global stock markets is $100 trillion, equal to 100% of GDP. The total capital raised through this market is over $10 trillion.
If we apply this to Vietnam, the purpose as stated in the Prime Minister’s plan is to develop the market capitalization to 100% of GDP, which is certainly a must, the debt market to 100%, which is certainly a must, and the ability to raise capital equivalent to 5% of GDP, which is certainly a must. This means raising about $25 billion of capital each year for the development of Vietnamese companies, equivalent to FDI.
Currently, the stock market has 3 major functions in providing capital. First is the vital source of funding between finance and business. The government not only issues government bonds but also repurchases them to regulate the capital source of the state budget. The stock market provides long-term and medium-term capital, while commercial banks can only provide short-term capital, and most importantly, it provides capital for private players.
The second function is to evaluate the quality of businesses, evaluate the quality of commercial activities by adjusting the value of capital. Alongside transparent financial companies with confirmed non-risk interest rates is the key to Vietnam’s long-term capital value.
Lastly, it increases the ability for Vietnamese investors and foreign investors. The Chairman of Dragon Capital expressed gratitude for the 30 years of participating in the research of Vietnam’s capital market.
“Our longest-lasting customer is my mother. She made her first investment in 1995 and it has now increased 9-fold. If we calculate for more than 20 years, the annual return for her in USD after considering inflation, interest rates… is 10-12%. If the capital market can generate such rewards for Vietnamese investors, it would be great. Finally, it alleviates the social burden of Vietnam”, said Mr. Dominic Scriven.
He also made recommendations on solutions to develop the securities market:
The first is to continuously develop the infrastructure, foundation, and ecosystem of the capital market. Especially, the network of organized investors in Vietnam must be expanded. Because the stock market in Vietnam is the most volatile market in the region and does not stop there.
The second is to control volatility, constantly strengthen trust in the stock market, especially the trust of investors.
The third is to specify factors. A topic that has been mentioned a lot today is the rating upgrade for Vietnam’s stock market. Dragon Capital strongly supports this and hopes that Vietnam’s Central Counterparty (CCP) policy will soon be implemented. If it cannot be implemented, it is necessary to be concerned about the restructuring issue when verifying foreign investors. If possible, it should be studied and piloted to select deposit certificates without voting rights.
The fourth is to jointly study and promote the development of Vietnam’s Financial Center. This is a golden opportunity for Vietnam.
