Public Counselor Minister Counselor of the Embassy of the Republic of Korea in Vietnam speaks at the Conference – Photo: VGP/Nhat Bac
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Speaking of the role of the Stock Market for Vietnam, the Public Counselor Minister Counselor of the Embassy of Korea evaluates the first function of the Stock Market is to provide long-term and more stable capital for business development activities compared to bank loans.
Bank loans are relatively short-term and unstable. These loans also require annual or monthly payments. On the other hand, stocks provide fixed capital in the form of equity.
In addition, corporate bonds provide capital for a period of 3 to 5 years.
The second function of the Stock Market is to enhance the prosperity of Vietnamese citizens. Stock investors can increase asset value as stock prices rise. Bond investors can earn higher returns on investment than bank deposits.
Pension funds invest in stocks and bonds to generate significant profits, which are then distributed to citizens in the form of pensions.
Therefore, citizens planning for retirement can participate in long-term investment funds.
Regarding proposals for the development of the Stock Market in Vietnam, representatives of the Embassy of Korea have made the following recommendations:
Expand the Vietnam stock market
On the supply side: Diversify listed stocks on HOSE by transferring stocks from UPCoM, where 50% of the market capitalization belongs to the industrial goods and services, and food and beverages sectors. Currently, banking and real estate sectors dominate the market capitalization on HOSE.
Relax foreign ownership limits to increase the supply of stocks for foreign investors, through Non-voting depository receipts (NVDR) to comply with the state management objectives for each sector and profession.
Create favorable conditions for listing start-ups and FDI enterprises to improve market diversity.
On the demand side: Encourage banks and insurance companies to invest in stocks, promote diversified and high-yield asset management strategies.
Introduce the people’s stock system to distribute stocks of reputable state-owned enterprises with a solid foundation at lower prices than public offerings, promoting citizens’ asset growth.
Implement pension funds to encourage people to prepare for retirement through long-term investment plans.
Attract foreign investment
Relax foreign ownership limits, provide equal rights to foreign investors, liberalize the foreign exchange market, and market regulations in English.
Regularly organize Investor Relation (IR) conferences to continuously introduce reputable Vietnamese companies to foreign investors.
Upgrade infrastructure and trading systems
Continuously improve the trading system to safely handle various orders, including stocks, futures contracts, and options, despite large volumes.
