Vietnam Achieves Significant Milestones for Stock Market Status Upgrade: CEO

Vietnam’s stock market is on the cusp of transformation. Recent statements from Huang Bo, the CEO of Guotai Junan Securities Vietnam (IVS), indicate that the nation is making commendable strides towards upgrading its stock market status from “frontier” to “emerging.” This ambition reflects a concerted effort from both regulators and market operators, emphasizing the growing importance and potential of Vietnam’s financial landscape.

This year stands out as a pivotal moment for the Vietnamese stock market, which is poised to become not just a viable investment avenue but also a robust channel for capital-raising aimed at funding large-scale infrastructure projects. Huang Bo envisions this development as instrumental in achieving the nation’s ambitious GDP growth target of at least 8%.

Historically, Vietnam’s major exchanges—the Ho Chi Minh Stock Exchange (HoSE) and the Hanoi Stock Exchange (HNX)—have demonstrated significant growth over the last two decades. The HoSE alone has seen its market capitalization swell by an impressive 23 times, reflecting a market capitalization that now constitutes 60% of Vietnam’s GDP, along with the presence of over 1,600 stocks.

The stock market’s contribution to the national economy cannot be overstated. Firstly, it has successfully mobilized resources for infrastructure development and industrial growth. Companies across various sectors, including energy, banking, real estate, and manufacturing, have raised trillions of VND (with VND1 trillion equivalent to approximately $39.28 million) through stock and bond issuances.

Secondly, the stock market has played a crucial role in promoting the equitization of state-owned enterprises (SOEs), enhancing their operational efficiency. High-profile equitizations, such as those of Vietcombank and Vinamilk, have not only boosted market liquidity but have also improved accountability and transparency, essential for connecting idle domestic capital to productive investments.

Moreover, the market contributes to better corporate governance and transparency, thereby attracting foreign investment. Publicly listed companies in Vietnam are required to adhere to international standards, fostering a climate of accountability that enhances investor confidence. The relaxation of foreign ownership limits, combined with Vietnam’s inclusion in FTSE Russell’s watchlist for market status upgrades, is expected to draw substantial capital from institutional investors.

A noteworthy trend is the increasing support for small and medium-sized enterprises (SMEs) and startups within the stock market ecosystem. The Unlisted Public Companies Market (UPCoM) offers smaller firms opportunities to raise capital without fulfilling stringent listing criteria. This has allowed many startups, particularly in digital services, agriculture, and clean energy, to secure funding for research and development and business expansion.

Looking ahead, if Vietnam continues with its reformative trajectory, the stock market could replicate the success seen in countries like South Korea and China, transitioning the economy from an emerging market into a global innovation hub, as articulated by Huang Bo.

To further strengthen the stock market’s role in economic growth, Huang Bo advocates for policymakers to prioritize strategies aimed at enhancing liquidity and accessibility. Recent amendments to the Securities Law underscore a strong commitment to market development. The introduction of the modern KRX trading system and the expansion of the derivatives market are anticipated to stimulate interest from institutional investors, while efforts to reduce transaction costs could incentivize individual investor participation.

An essential aspect of this evolution involves fortifying the legal framework and accelerating reforms to align disclosure standards with international norms, such as adopting the International Financial Reporting Standards (IFRS). Encouraging Environment, Social, and Governance (ESG) reporting may also attract capital inflows from funds with a focus on sustainable investment.

Huang Bo emphasizes the urgency of encouraging tech firms to list through tax incentives and regulatory exemptions, alongside proposals to establish an “innovation exchange.” Partnerships with venture capital funds to facilitate the listing of promising tech companies may resemble the successful model seen with the Shanghai Stock Exchange’s STAR market.

Lastly, continued relaxation of foreign ownership limits in strategic sectors—such as banking and renewable energy—will be crucial as Vietnam works to expedite its upgrade to “emerging” market status. Huang Bo reaffirms that Vietnam is well on track in this regard, thanks to the diligent efforts of regulatory bodies like the State Securities Commission (SSC) and Vietnam Securities Depository and Clearing Corporation (VSDC).

The impending implementation of the KRX trading system is expected to enhance liquidity, accelerate order processing, and create opportunities for the development of derivative products. With various reforms underway, including enhancing information disclosure practices and ensuring bilingual communication, Vietnam appears to be generating increased confidence among international investors, making the prospect of an upgrade in 2025 optimistic.

As 2025 approaches, Huang Bo believes that the Vietnamese stock market is ripe with opportunities for substantial growth—encompassing potential status upgrades, rising corporate profits, and increased foreign institutional investment as the new trading system becomes operational.