[NEWS] - Promoting foreign capital into the stock market

According to experts, with the attractive price of the current stock market, it is forecasted that foreign capital flows into the Vietnamese market will become more active shortly.

Net out netblock from the first year to this

With the US Federal Reserve (FED) continuously raising interest rates, making interest rates higher and highest since the global crisis in 2008 so far, international capital flows have been disturbed when However, in Vietnam, on the stock market, foreign investors have continuously been net buyers in recent years. Since the beginning of the year, foreign investors have net bought about 7,300 billion dongs.

According to the assessment, it is expected that the restructuring of investment capital flows into emerging markets and frontier markets will take place strongly, this change of capital flows will have a direct impact on the stock market securities of Vietnam. However, Vietnam’s GDP growth rate of more than 8% last year, and the Vietnamese government also projected a growth rate of around 6.5% this year, along with the Vietnamese stock market’s decline significant decrease in the period since last year and P/E is expected to be at 10x - an attractive level in the past 10 years since 2012,... are positive signs that can be trusted that foreign capital inflows are still strong may continue to be interested in Vietnam’s stock market.

“With the growth forecast of our country’s economy this year, plus the attractive valuation of the current stock market, foreign capital inflows into the Vietnamese market are forecasted to remain positive shortly. shortly”, said the Chairman of the Board of Directors of KIM Vietnam Fund Management Company - Mr. Yun Hang Jin. Commenting on the indirect investment capital flow on the Vietnam stock market, it can be seen that in August 2019, foreign investors have been net selling continuously. Still, since the fourth quarter of 2022, foreign investors have been net buyers again while extending the net buying momentum so far. This cash flow has also contributed to the recovery of Vietnam’s stock market after a long period of decline. In addition, if from 2007 to March 2023, the net transaction value of foreign investors is about 72,000 billion VND, then Vietnam is becoming a potential destination for many businesses in the process of expanding—the production chain after the pandemic. In addition, many foreign investors who came to the Vietnamese market last year became hopeful that FDI inflows will grow again this year, with a focus on the recovery of newly registered capital flows and M&A capital flows. At the same time, foreign investors are expected to return more actively to the stock market in Vietnam.

“We assess that Vietnam’s stock market is now relatively attractive compared to other countries in the region. If economic indicators are still quite stable, it is forecasted that foreign capital flows will soon return to Vietnam. In addition, in February and March, we conducted many advertising campaigns in Japan, Korea, and Thailand to introduce the economic potential and the people of Vietnam,” said Mr. Yun Hang Jin shared.

Deploying solutions to solve the problem of limiting foreign room

Regarding the issue of attracting foreign investors to Vietnam’s stock market, JICA Consultant, Daiwa Research Institute, Daiwa Research Institute - Mr. KOJIMA Kazunobu said, the accessibility of many For foreign investors to Vietnam’s stock market, MCSI assesses that Vietnam’s stock market is a market with easier access conditions for investors. Emphasizing that market access has improved, however, Mr. KOJIMA Kazunobu said that the basic and biggest problem for Vietnam is the foreign ownership limit (FOL) ratio and the gender ratio. The limit is applied to foreign investors based on the provisions of the company’s charter. In the coming time, for foreign investors to have easier access to the Vietnamese stock market, it is necessary to consider adjusting the foreign ownership ratio. Improving the problem of foreign ownership limit is also an important condition to upgrade the stock market of Vietnam.

According to Deputy General Director of Kien Thiet Securities Vietnam - Mr. Do Bao Ngoc, besides the attractive factors of valuation and transparency, Vietnam needs to do better on several issues such as early hatching. build a new technology system to have a full range of products to help investors have full tools to prevent risks; accelerate the process of equitization of SOEs to create quality goods for the market, helping to rapidly increase the size of the stock market in Vietnam to meet the investment standards of foreign investors in many industries and fields conditional business.. to increase attractiveness and attract foreign capital.

Sharing the solutions to solve the problem of foreign room limit, the State Securities Commission (SSC), Director of the International Cooperation Department - Mr. Vu Chi Dung said, one of the immediate solutions is to issue non-voting depository certificates (NVDR). The regulation of NVDR can help foreign investors who want to trade shares of public companies that have run out of foreign room or belong to conditional industries. The Enterprise Law 2020, the Securities Law 2019, and Decree 155/2020/ND-CP have set out framework regulations related to NVDR, creating a premise for building a legal framework for product deployment later. However, to deploy NVDR, it is necessary to prepare a trading system, operating mechanism as well as specific guiding regulations ... According to Mr. Dung, through the Joint Capital Market Development Program (J-CAP) part. , The World Bank is currently supporting the State Securities Commission to find experts to develop an NVDR research project for the stock market. In addition, the solution of deploying a portal to disclose information on out-of-band transactions of foreign investors for stocks that have run out of foreign room is also studied. This is a solution that provides information on out-of-band transactions of foreign investors, including price information, in real time. However, this also requires necessary IT system upgrades from the Stock Exchange and securities companies.

Hoang Yen (Collection source)