Vietnam Stock Market: Name Shows Professionalism

 

This is the target of the HSTC reform scheme. Further, after the transformation of the HSTC, the Hanoi Securities Trading Centre (HASTC) and the Custodian Centre will also be upgraded into the stock exchanges in the later roadmap.

 

The Seminar on the “Scheme to transform the Ho Chi Minh City Securities Trading Centre into the Stock Exchange” held by German Technical Cooperation Organisation (Deutsche Gesellschaft für Technische Zusammenarbeit - GTZ) in cooperation with the State Securities Commission (SSC) produced a message that this reform is indispensable to match the international common practices. From now on, the Vietnamese stock market will be busier thanks to professionalism and attractiveness created by more big foreign investors.

 

Mr Vu Bang, vice chairman of the State Securities Commission, said, after a period of operation, the HSTC has exposed a shallow and small development of the stock market and an asynchronous and unprofessional development of the bond market. Meanwhile, the technical infrastructure fails to meet the market requirement, and the market management inclines to follow the administrative management working way and still relies on the State Budget. Therefore, the transformation is an urgent requirement to overcome shortcomings of the securities trading centre, to improve the self-management role, subjectively to operate the market, to increase the finance self-control, to heighten the professionalism and to upgrade the international position.

 

Accordingly, in the future, the securities transacting centre will be run by the Ho Chi Minh City Stock Exchange while the over-the-counter (OTC) market will be managed by the Hanoi Securities Trading Centre. Securities firms will organise transactions of unlisted stocks. In the short term, the stock exchange will be operated in the form of a one-member limited liability company, which is owned by the Ministry of Finance and does not operate for the profit purpose. Securities companies are transacting members. The stock exchange will guarantee safe, public and transparent securities transacting activities, protect legitimate rights and interests of investors, and head for the systematic development of the Vietnam Securities Centre.

 

What does the future hold for the Vietnamese stock market after the transformation? Mr Christopher Koch, senior expert of the German Stock Exchange, said, at present, the Ho Chi Minh City Securities Trading Centre (HSTC) only has 36 listed firms but the market expansion is not so slow. However, in the coming time, sounder measures should be introduced to encourage and attract more enterprises to join the stock market. To that end, the capital flow will keep non-stop moving because more investors, both foreign and domestic, will take part in the market when their rights and interests are ensured. Listed firms and investors will be more interested in securities trading.

 

“The roadmap needs shortcutting to speed up the development. I proposed the transformation of the Hanoi Securities Trading Centre into the stock exchange be carried out sooner. However, it is not necessary to have two stock exchanges but only one with two divisions of Hanoi and Ho Chi Minh City,” Koch advised Vietnamese policymakers. The unique advantage of the transformation is the name. The name change will make investors feel more secure because the name tells professionalism of the market. More importantly, the name is suitable to the international common practices.

Ms Ulrike Maenner, Chief Advisor of the GTZ Macroeconomics Reform Programme

Vietnam is an emerging market and is very attractive to investors. Newspapers in Germany have discussed the potential of the Vietnamese market. In my opinion, Vietnam is generating great attractiveness to investors. To realise its potential, Vietnam should build institutions to keep the development on the right track. Hence, the name of institutions must also be familiar with foreign investors. Besides, the legal institutions must be clear to make investors believe in Vietnam. In particular, the development of the private sector is very important. I think financial moderators haven’t paid it due attention. They will play an important role in the stock market. The legal environment not only introduces regulations but also mentions the State roles toward institutions. These changes will create a playground for private investors. 

 

Mr Le Van Chau, Chairman of Securities Trading Association (the first president of SSC)

 

I am happy about this transformation although it is a bit late. I wish the construction of a clear stock market model but the current law is a hurdle. The international market is developing very fast and does not select qualified enterprises for listing. Vietnam should follow this. Until 2010, Vietnam needs to create large capital mobilisation channels; therefore, it must speed up the development pace of the stock market. Vietnam should generalise experience of many countries in the world to follow, not creating something new. To be the master of the market, the pressure of the State intervention will be further reduced

The stock market must be independent and State-owned, and needs only one director appointed by the State. In my opinion, the stock exchange will transform into a joint stock company and shareholders are securities firms. The Hanoi Securities Trading Centre should be also turned into the stock exchange soon to match the international common practices.

 

The securities trading centre form has exposed many shortcomings. It is time to change

Mr Tran Dac Sinh, Director of Ho Chi Minh City Securities Trading Centre

 

The transformation of the Ho Chi Minh City Securities Trading Centre into the Stock Exchange will be carried out in three phases. In the 2007-2010 phase, the Stock Exchange will operate as one-member limited liability company, which is owned by the Ministry of Finance – the State ownership. In the 2010-2015 phase, the Stock Exchange will operate as a joint stock company, in which the State will hold more than 75 per cent of stakes. After 2015, the Stock Exchange will operate as a public company, in which the State will keep 51 per cent of stakes and will be listed on the Stock Exchange when it is qualified.