Liberalising Vietnam's securities market 2012-09-12

Liberalising Vietnam's securities market

Foreign investors have been able to all own Vietnam domestic securities companies as from 15 August, under a new decree issued by the government.

It sets in play opportunities for Hong Kong and other investors to enter the Vietnam banking, securities and insurance sectors in force, providing foreign entities a luck to acquire existing firms or set up new vehicles.

The new opportunities under Decree 58/2012/ND-CP are aimed at maximising a thrust to attract foreign capital and further internationalise the local investment scene, allowing firms that have been involved in their chosen field for years to establish Vietnamese companies.

As to securities, Vietnamese stocks have surged 20% so far this year according to investment analysts, to make the market of the best-performing in Asia, driven by improving economic fundamentals and currency stabilisation.

Some investment managers expect the Vietnam stock benchmark VN Index to gain solidly and outperform ASEAN markets over the next three years, as domestic investors turn away from bank deposits, property and physical gold.

Media reports cite the fact that 46 of the 105 operational companies in Vietnam have foreign invested capital, accounting for nearly 44% of total investment.

Amount 27 listed securities firms are believed to have foreign capital, Golden Bridge Vietnam (GBV) and Phu Hung Securities are said to have already reached the ceiling for foreign investment under prevailing rules. Saigon Securities Inc (SSI) has limited room for foreign investment, as does Ho Chi Minh City Securities Corp (HCM), according to market reports.

A number of firms is said to be narrowing the scope of their operations to guard against the external economic downturn, with some looking to merge.The opportunities for foreign firms can be expected to be boosted with the relaxation of the investment regulations.

The new regulations do, however, stipulate that any foreign acquisition of capital contribution to a securities company would have to be made under Ministry of Finance guidance.

On the other hand, the new regulation is expected to have limited impact on the actual operations of securities companies.

The National Securities Commission is trying to hasten the restructuring of securities firms and aims to reduce the number of brokerages.