MANY SOLUTIONS TO STOCK MARKET RESTRUCTURING

The stock market size will reach 100% of GDP by 2020 and 120% by 2025, and the bond market size will climb to 47% and 55%, respectively. The number of listed companies in 2020 will be 20% more than that of 2017.

The Prime Minister recently issued Decision 242/QD-TTg approving the “Stock Market and Insurance Market Restructuring” Scheme to 2020, with a vision to 2025.

Important funding channel for the economy

The overall objectives of the scheme are to further comprehensively restructure the stock market to become an important medium and long-term capital channel for the economy; build a reasonable and balanced structure between the monetary market and the capital market, between the stock market and the bond market, and between government bonds and corporate bonds; actively support restructuring State-owned enterprises (SOEs), changing the economic growth pattern and promoting the private sector development; and strengthen opening and integration with regional and world markets.

The stock market size will reach 100% of GDP by 2020 and 120% by 2025 and the bond market size will climb to 47% and 55%, respectively. The number of listed companies in 2020 will be 20% more than that of 2017.

Stock investors will reach 3% of the population by 2020 and 5% by 2025, with a reasonable structure between individual investors and institutional investors, between investors domestic and foreign investors. Vietnam will focus on promoting the development of professional stock investors.

Vietnam will diversify products on the stock market; deploy covered warrants, government bond futures and new futures indices beside current VN30 Futures Index before 2020 and gradually launch stock options and futures before 2025.

Besides, by 2025, the quality of corporate governance in listed companies will reach the ASEAN-6 level. Specially, the scheme also set a target that the Vietnamese stock market will be upgraded to emerging markets before 2025.

Eight groups of inclusive solutions

The scheme puts forth some solutions to enhance market liquidity, including eight groups of inclusive solutions: Perfecting the legal framework; restructuring sources of supply; restructuring the stock investor base; restructuring securities business organizations; restructuring the market organization; enhancing capacity, management and enforcement supervision; upgrading the market class; and strengthening the role of professional associations.

On the solution to the legal framework, the scheme states that the amended Law on Securities will be submitted to the National Assembly in 2019 with the aim of diversifying and improving supply quality and listings, attracting foreign investors, perfecting functions, duties and powers of State securities authorities.

The project also introduces solutions for increased transparency and quality of supplies like strengthening inspection and supervision of fundraising and use of funds on the stock market; classifying listings into categories, raising listing conditions for categorized listings; and checking the quality of financial statements and auditing activities of auditing agencies and auditors.

On solutions for supply base restructuring, the scheme stated the need for diversifying the supply base in the market; deploying green bonds to mobilize funds for green and sustainable economic development and attracting foreign investors; developing various types of ETF investment funds and real estate investment funds to diversify fund products.

Vietnam will encourage the development of voluntary retirement programs (pension insurance products and pension funds) for domestic investors. The country will study perfecting the legal framework for foreign ownership and raising the foreign room in some industries, and speed up administrative procedure reform to facilitate foreigner participation in the Vietnamese stock market.

On solutions for increased liquidity, Vietnam will develop new types of orders on the stock market, especially orders for professional investors and rationalize intraday trading. Besides, the daily trading bands will be widened and applied to listed companies in different categories. Automatic switch-off mechanism will be applied to some strongly volatile cases while extended trading hours will be considered for some special cases. Financing forms will be diversified, depending on financial capacity and risk management capacity of securities business institutions.

In addition, the scheme puts forth solutions on enhancing the capacity, management and enforcement supervision; upgrading the market class; and strengthening the role of professional associations.

Source: VCCI