South Korean diplomat outlines strategies to enhance Vietnam's stock market

Vietnam's bourse plays a pivotal role in its economic framework, according to Yoon.

"The first and foremost function of the stock market is to provide a stable, long-term capital source for enterprise development, a more consistent option compared to bank borrowing," he asserted.

He said that while shares offer permanent capital as ownership stakes, corporate bonds furnish funding with terms typically ranging from three to five years.

"The secondary function is to elevate the wealth of the Vietnamese populace," Yoon said. "Investors see an increase in asset value with rising stock prices, while bondholders can achieve yields surpassing bank deposit rates."

He mentioned the significance of pension funds investing in equities and bonds to yield substantial profits, which are then allocated as pensions to citizens, hence supporting their retirement planning through long-term investment funds.

Yoon also recommended three strategic solutions for Vietnam's market evolution: expanding the market, enticing foreign capital, and modernising the infrastructure and transaction systems.

For market expansion, he stressed the need to address both supply and demand. "On the supply side, a trifecta of factors need attention," he said.

Firstly, he suggested the diversification of stocks on the HSX by listing those from the Unlisted Public Company Market (UPCoM), noting that "half of UPCoM's market cap is currently tied to commodities, industrial services, and the food and beverage sector, while banking and real estate predominate on the Ho Chi Minh Stock Exchange (HSX)."

He further recommended easing foreign ownership limits to increase share supply for international investors through Non-voting Depository Receipts, aligned with the government's industry-specific objectives.

Thirdly, he called for simplified listing processes for startups and foreign-invested enterprises to foster market diversity.

"On the demand side, there is a need to motivate banks and insurance companies to channel investments into equities, encouraging strategies for diverse asset management and high yields," Yoon said.

Moreover, he proposed the launch of a special initiative, offering shares from state-owned enterprises to the public at discounted rates to spur citizen wealth growth, and the deployment of pension funds to encourage retirement savings through long-term investment strategies.

Touching on foreign investment, the commercial counsellor recommended loosening foreign ownership constraints, granting equal rights to foreign investors, liberalising foreign exchange markets, and introducing English-language market regulations.

He also advocated for regular investor relations conferences to promote Vietnam's esteemed companies to the global investment community.

"Continual enhancements to the transaction system are necessary to safely process a diverse array of orders, including stocks, futures, and options, regardless of volume," he added.

Over the past 23 years, Vietnam’s stock market has demonstrated a remarkable trajectory of resilience and growth, despite facing periods of intense volatility. The VN-Index, in particular, has shown a remarkable ability to bounce back, especially after the significant downturn of 2008, witnessing a decade of growth thereafter

The State Securities Commission (SSC) has been working towards upgrading the stock market from a frontier to an emerging market, attracting notable international investor interest.