Many markets such as China, Arabia, etc., although not meeting all the criteria, were still upgraded. What is attractive about Vietnam that investors like, creating public opinion for rating organizations to "support" or loosen standards for Vietnam?
Lack of quality goods in the stock market is one of the barriers preventing foreign capital from flowing into Vietnam. Not being attractive enough in the eyes of foreign investors also makes the upgrading process much more difficult than neighboring markets.
At the July dialogue with the theme “Upgrading, calling for capital and developing institutional investors” organized by the Securities Journalists Club last weekend, Mr. Nguyen Duc Hung Linh, founder and consulting director of Think Future Consultancy, said that there are two main obstacles that we must pay attention to in order to optimize the upgrading process.
First is goods. Goods are very important in the process of upgrading. In 2017, only a few Vietnamese stocks were included in the MSCI Emerging Markets Index, such as VNM, due to the large free float ratio. In addition, there were 3 other stocks. This index has more than 1,000 stocks, while Vietnam only has 3 stocks, which means a very small proportion. Of the 1,000 billion USD used to buy and sell that index, we are only allocated a few percent of that amount, which is insignificant.
“We had hoped that since 2017 we would have more new listed companies like Thaco, which was put up for sale and then eventually not listed. If we had more companies like that, they would be more attractive to foreign investors. The lack of goods is also due to economic structure issues, equitization strategies, and is related to the macro economy…”, Mr. Linh said.
Second, we can enter emerging markets but still be pushed out, typically Pakistan, this year, next year, out until one day we fall into a situation where we don't know which index to put in anymore.
The most important thing is how foreign investors evaluate the Vietnamese market. We are trying to satisfy all the qualitative and quantitative factors they set, but there are markets that do not satisfy, lack many criteria, but they still enter the Emerging Market Index because... they are too attractive.
That shows that the pressure from investors is very high. The rating company itself must also take into account market factors to consider whether to include that country or not, for example in the case of Saudi Arabia, Saudi Arabia and China.
The case of China is more obvious because it is the largest market in the world, with many large companies. In Saudi Arabia, Saudi Aramco is the largest oil company in the world, if Saudi Arabia is not included in the emerging market, this stock will not be included in the MSCI Emerging Markets Index. That is a big absurdity, investors have used pressure to make that country included in the emerging index.
“Returning to Vietnam, do we have anything attractive to attract investors to like Vietnam, creating public opinion for other rating organizations to “support” or loosen standards for Vietnam? In the recent past, I hope that will happen, but the fundamental problem is whether we have good goods or not, but I really think it has not improved compared to 5-7 years ago,” Mr. Linh emphasized.
According to Mr. Linh, if we really have a good company, investors have many ways to buy and own that company. Trying to upgrade is a step forward, but after upgrading, we must optimize capital flow to develop the economy.
Regarding improving the quality of goods, recently, Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission, said that currently, the IPO and listing processes are two separate processes. There may be some enterprises that have completed the IPO but the listing process is prolonged. Meanwhile, for foreign financial investors, after buying shares, having to wait 3 months or more without transactions and liquidity will be a huge barrier, even some funds are currently holding unlisted shares.
To address this, the State Securities Commission is reviewing securities regulations and Decree 55 to integrate the two IPO and listing processes into one process. Therefore, after amending these processes, it can be said that the listing of enterprises will be carried out immediately and substantially after the IPO.
According to Mr. Hai, in the 24-year development process since the establishment of the stock market, the Government, the Ministry of Finance, and the Securities Commission have had a very clear orientation, which is to minimize intervention in the market by administrative measures. Therefore, there will be no return to using administrative measures to force businesses to list or abandon the market.
In recent times, the number of large enterprises listed on the market has not been large. However, the relationship between large enterprises and market upgrade is an organic relationship. Many large enterprises have not listed because they have not seen a large number of investors who can buy a large part of their capital and they do not want their ownership ratio to be too spread out.
On the other hand, foreign investors are more eager to enter the market when they see that there are many large enterprises. This is a two-way relationship.
Source: VnEconomy
