Developing the stock market to become a medium and long-term capital conduit for the economy
Speaking at the seminar, Deputy Minister of Finance Nguyen Duc Chi said the Ministry of Finance and other ministries are reporting to the Government on the Development Strategy of Vietnam’s stock market to 2030 with a vision to 2045.
The Strategy is to develop the unified stock market in the financial market in association with the growth model reform, in connection with the world market and on the basis of technology application and in accordance with requirements for digital transformation.
The strategy sets out the target of developing the stock market to become a medium and long-term capital conduit for the economy, supporting the banking system. The stock market size in 2025 will be at least 85% of GDP (adjusted) and 110% of GDP by 2030. The number of investors will reach 5% of the population in 2025 and 8% in 2030. Investors include professional organizations, individuals and domestic and foreign investors.
In the near future, the market will be organized in the direction of restructuring the model of parent company-subsidiary companies; reorganize the securities depository center according to the model of a corporation and unify technology for securities trading and payment.
The stock market set a target of upgrading the market before 2025 according to the standards of FTSE Russell and MSCI. Vietnam’s stock market will also actively integrate into the world market and become one of the four major markets in the ASEAN region.
The Deputy Minister said after the Government transitioned to a new economic state, production and business has seen rapid recovery and socio-economic life has gradually returned. As a test of the economy, the stock market has been recording strong growth recently.
However, Deputy Minister Nguyen Duc Chi noted that we should not be too optimistic and should pay attention to reviewing risks.
He said despite advantages, the stock market itself also has risks during the high growth phase, with trading surging and it is necessary to consider risks from the rapid growth of investors, especially new investors and risks from growth of the private placement bond market.
For the sustainable development of the market, Mr. Nguyen Duc Chi noted it is necessary to focus on factors on macro stability, national financial security, weak and risky entities and actively develop solutions to ensure sustainable macro balance; fiscal policy to support businesses after the pandemic; focus on organizing the corporate bond trading market to strengthen the management and supervision and minimizing risks; strengthening inspection and strictly handling violations in the market.
Stock market helps Vietnam’s financial market structure
Despite many challenges from the Covid-19 pandemic, Vietnam’s stock market has recorded remarkable development, along with the development of businesses and the economy, and attracted a large number of investors.
According to Mr. Do Ngoc Quynh, General Director of VnDirect Securities Company, the recent development of the stock market with the share market channel and the bond market helps businesses and the Government effectively raise capital, and makes Vietnam’s financial market structure much more sustainable.
In the past, capital for production and business of businesses depended on commercial banks with short-term loans. However, to provide medium and long-term loans, commercial banks will face problems.
Currently, along with the bond and stock market, businesses have much more diversified and quality capital mobilization channels. Each type of capital has different characteristics and businesses can build an optimal, safe and flexible capital structure.
Mr. Quynh said the market is entering the stage of in-depth development, so the quality must be improved for the market to develop more sustainably in the future.
Ms. Pham Thi The, Advisor to the Board of Directors of 1369 Construction Joint Stock Company, said real estate businesses need a large amount of capital, especially in the past two years due to the impact of the Covid-19 pandemic.
Depending on commercial banks is very risky, because the policy of each bank at each time is different. For private enterprises such as 1369 Construction Joint Stock Company, capital is important and creates motivation for development.
Appreciating the role of the stock market in raising capital for the company, Ms. Pham Thi The said since the company listed on the stock exchange with a charter capital of VND50 billion, so far the company’s charter capital has risen to VND600 billion.
The Investment Director of Nam Long Group Pham Dinh Huy said after eight years of listing, Nam Long has become a billion-dollar enterprise on the stock exchange. But due to obstacles in regulations, the company has to face difficulties in capital mobilization in 2018.
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He hoped that in addition to restructuring the stock market, conditions on listing, issuance and foreign ownership will be loosened so that businesses will not depend on one entity.