The World Bank will continue to accompany the Ministry of Finance and the Securities Commission in implementing programs and projects to enhance market management and supervision capacity; and deploy solutions to achieve the goal of upgrading the stock market.
The Chairman of the State Securities Commission recently had a working session with Ms. Mariam Sherman, the new Country Director of the World Bank, which discussed the process of upgrading Vietnam's securities market.
At the meeting, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said that in recent years, the Securities Commission has always received support from the World Bank in policy advice, sharing international experience as well as in developing specialized assessment reports.
In particular, advisory reports on technical assistance for the development of the Securities Law, as well as regulations, training programs to improve the capacity of officials working in securities market management and supervision in the common capital market development program (J-cap) have been implemented since 2018.
Currently, the Ministry of Finance and the Securities Commission are making efforts to implement solutions to meet the criteria of international credit rating organizations to upgrade the Vietnamese stock market from a frontier market to an emerging market.
With the support of the World Bank, the State Securities Commission has organized many conferences, scientific seminars, met with international credit rating organizations, the Asian Financial Market Association (ASIFMA), listened to comments and contributions to perfect documents, mechanisms and policies to help the Vietnamese stock market upgrade in the coming time.
The solutions proposed by the Securities Commission have also received consensus from international organizations, market members, and scientists, and are considered highly feasible and practical.
Ms. Mariam Sherman, the new Country Director of the World Bank, said that the World Bank will consider continuing to implement the J-Cap program for the Vietnamese stock market because of the role and effectiveness that the program has brought in the past.
She highly appreciated the solutions that the Ministry of Finance and the Securities Commission are implementing to achieve the goal of upgrading the Vietnamese stock market.
In the coming time, the World Bank will continue to accompany the Ministry of Finance and the Securities Commission in implementing programs and projects to enhance market management and supervision capacity; and deploy solutions to achieve the goal of upgrading the stock market.
The World Bank estimates that upgrading the stock market could bring up to $25 billion in new investment from international investors into the Vietnamese market by 2030 under a number of important conditions.
Specifically, first, Vietnam must be upgraded by both international index providers FTSE Russel and MSCI.
The World Bank appreciates and agrees with SSC’s current approach of prioritizing secondary emerging market upgrade by FTSE Russell; however, it should be noted that the majority of new investment will come from MSCI upgrades.
Second, consider addressing the issue of foreign ownership limits (FOL) and continuing to equitize large state-owned enterprises. Solutions include: improving information disclosure, increasing access to stocks that have reached the limit, and most importantly, increasing the foreign ownership limit.
If FOL remains a constraint, Vietnam may only receive a maximum net inflow of USD 5 billion, as the market then accounts for less than 1% of the global EM index. But if FOL is fully resolved, Vietnam's weight in the EM index could increase to more than 1%, which could bring in an additional USD 8-15 billion.
Third, a healthy global investment environment is needed so that Vietnam can also enjoy the natural growth of global investment in emerging markets, which is estimated to grow by about 7% per year. This means an additional 8-12 billion USD in investment by 2030.
Source: VnEconomy
