Stock Market

“Japan Supports Enhancing the Efficiency of Vietnam’s Stock Market”

On September 23, the State Securities Commission of Vietnam (SSC) and the Japan International Cooperation Agency (JICA) hosted a workshop in Hanoi titled "Promoting the Efficiency of Vietnam's Stock Market." This event marked the launch of a project aimed at "Enhancing Capacities for Promoting the Efficiency of Vietnam's Securities Market."

Administrator

25 September, 2024

Chairwoman of SSC Vu Thi Chan Phuong speaks at the Conference – Photo: VGP/HT

In her opening remarks at the workshop, Chairwoman of the State Securities Commission (SSC) Vu Thi Chan Phuong stated that this year, 2024, marks the 51st anniversary of diplomatic relations between Vietnam and Japan. Vietnam-Japan bilateral cooperation plays a crucial role in promoting joint initiatives toward sustainable development and enhancing fairness and transparency in Vietnam’s stock market.

According to the Chairwoman, since its establishment, the Vietnamese stock market has achieved numerous milestones, and the legal framework has been constantly improved to ensure the market operates safely and transparently. As of August 2024, the market capitalization reached over VND 7,000 trillion (USD 280 billion), a 19.1% increase compared to the end of 2023, equivalent to 69.2% of the estimated 2023 GDP. From the beginning of the year until now, the average trading value reached nearly USD 1 billion, a 31.3% increase compared to the previous year’s average.

The market currently has 728 listed stocks and 878 stocks on UPCoM, with a total listing value of VND 2,246 trillion, a 5.5% increase compared to the end of 2023. Foreign investors hold approximately USD 50 billion worth of stocks, equivalent to over 17% of the market capitalization. These results demonstrate the robust development of Vietnam’s stock market.

Mr. Sugamo Yuichi, Chief Representative of JICA Vietnam – Photo: VGP/HT

Following the success of the project “Enhancing Capacity for Improving Equity Market Fairness and Transparency in Vietnam,” with extensive experience in building and developing Japan’s stock market, the Chairwoman of the SSC believes that JICA will continue to support the development of Vietnam’s stock market in line with the industry’s development strategy. This support will help the SSC enhance its management and supervision capabilities toward achieving the goal of “ensuring transparency, strengthening management, supervision, inspection, and enforcement, protecting investors’ interests, and maintaining market confidence” in this project.

The head of the securities sector evaluates that the project meets the urgent need to enhance the capabilities in managing, supervising, and operating the stock market in Vietnam. The project’s outcomes are also in line with the Party and State’s guidelines to implement the Government’s resolutions on developing a safe, transparent, effective, and sustainable capital market to stabilize the macro-economy and mobilize resources for socio-economic development. This includes promoting the modernization of information technology in managing and supervising the stock market.

“After this kick-off workshop and the implementation of the minutes of discussion between the SSC and JICA, the legal framework for the securities market, including regulations on listing management, issuance, inspection, supervision, and violation handling to protect investors’ interests, will be further improved. At the same time, the awareness of market participants will also be enhanced,” said Chairwoman Vu Thi Chan Phuong.

Workshop on “Promoting the Efficiency of Vietnam’s Stock Market” – Photo: VGP/HT

At the workshop, Mr. Sugano Yuichi, Chief Representative of JICA Vietnam, said that over the past two decades, JICA has supported the Vietnamese government through numerous technical cooperation and financial projects to develop a market-oriented economy and promote deeper international economic integration. Within the framework of the project “Enhancing Capacity for Improving Equity Market Fairness and Transparency in Vietnam” from 2019 to 2023, JICA has actively contributed to improving the system of legal documents under the Securities Law, such as decrees, circulars, and the process of formulating the Vietnam Stock Market Development Strategy.

Mr. Sugano Yuichi assessed that Vietnam’s stock market has been developing rapidly over the past two decades, and the interest of foreign investors, especially Japanese investors, as well as domestic investors, in the Vietnamese stock market is increasing. To further promote the development of the stock market, the Vietnamese government is making efforts to upgrade the market from a frontier market to an emerging market. In this context, JICA continues its cooperation in the second phase of the project to further support the SSC, stock exchanges, and relevant parties through technical cooperation to enhance the fairness, transparency, and efficiency of Vietnam’s stock market in the new development cooperation phase.

At the workshop, a representative of the SSC shared the strategy for developing Vietnam’s stock market by 2030.

Regarding the issue of initial public offerings (IPOs), Mr. Kojima Kazunobu, Chief Advisor of JICA, emphasized: “Foreign investors, including Japanese investors, are paying great attention to Vietnam’s stock market. The best opportunity for foreign investors to invest in Vietnam’s securities is to participate in IPOs, but the current auction process makes it difficult for them to do so. Moreover, the number of companies conducting IPOs and listing on the stock market in recent years has been quite limited.”

To address this issue, Mr. Kojima suggested that Vietnam needs to establish a new IPO method compatible with international standards, such as underwriting and book-building.

“If large companies and emerging companies with investment appeal conduct fundraising through IPOs and listings, a large amount of foreign capital will flow into Vietnam,” said Mr. Kojima Kazunobu.

In his closing remarks at the workshop, Vice Chairman of the SSC Bui Hoang Hai assessed that compared to other countries in the region, Vietnam’s stock market has developed to a similar scale as other markets in the ASEAN region. The SSC recognizes that, at this point, it is necessary to focus on enhancing the quality of the market.

“This project is necessary and suitable to the needs of the SSC, focusing on enhancing the efficiency of the primary market, strengthening intermediary organizations, and promoting the function of associations in supporting the SSC in supervising the market. To achieve these goals, in the next step, the SSC will implement plans and project contents to ensure the progress and quality of the project,” said Mr. Bui Hoang Hai.

The project “Enhancing Capacity for Promoting Efficiency of Vietnam’s Stock Market” aims to enhance the capacity of the SSC and the 3 Stock Exchanges (HNX) in Hanoi and Ho Chi Minh City through various activities such as close consulting and capacity building on numerous related issues. The project focuses on supervising and inspecting the stock market, supervising market intermediaries, managing listings and public offerings of securities according to international standards, and raising awareness of listed companies’ responsibilities in protecting investors. The project comprises 4 components:

(1) Enhancing the capacity of the SSC and the Stock Exchanges in inspecting and supervising the market to detect unfair transactions and activities in the stock market (including the derivatives market) and manage them effectively.

(2) Enhancing the capacity of the SSC in supervising and developing market intermediaries (securities companies and fund management companies) toward strengthening investor protection, effectively utilizing self-regulatory organizations, and developing institutional investors.

(3) Enhancing the capacity of the SSC and the Stock Exchanges in managing listings and public offerings of securities, focusing on market restructuring (including the startup market) and listing regulations; managing listings (focusing on information disclosure by listed companies, including non-financial information such as ESG, TCFD; and international standard underwriting/book-building methods.

(4) Enhancing the capacity of market intermediaries (securities companies and fund management companies) to strengthen investor protection and promote fairness, transparency, and efficiency in Vietnam’s stock market.

Through this project, Japan will continue to support the SSC, stock exchanges, and relevant parties through technical cooperation to further promote fairness, transparency, and efficiency in Vietnam’s stock market in the new development cooperation phase.

Huy Khai