Việt Nam eyes foreign investors to grow bourse

Vietnamese regulators will submit a proposal next month to ease restrictions on foreign ownership in companies as they lure more international investors to a stock market that is 14 times smaller than Singapore’s.

The proposal would raise the foreign ownership limit for publicly traded companies from the existing 49 per cent, Mr Vũ Bằng, chairman of the State Securities Commission, said in an interview.

TradersTraders at the Hồ Chí Minh City Stock Exchange

The Ministry of Finance will submit the plan to the government next month for consideration, he said, adding that the government will decide the new ownership limit.

Under the proposal, ownership limits may be raised for certain industry groups or approvals may be granted on a case- by-case basis, Mr Bằng said.

He also disclosed that the proposal will include allowing foreign investors to buy non-voting shares to boost their holdings.

Vietnamese regulators see foreign investment as one key to the stock market’s growth, as the biggest year-to-date stock purchases by international investors since 2008 made the benchmark VN Index South-east Asia’s best performer.

The nation’s stocks are valued at US$45 billion (S$56 billion), compared with US$614.7 billion in Singapore, the region’s largest market.

“If there is a breakthrough in foreign investment, it will positively impact the development of the stock market,”

Mr Bằng said on Wednesday.

“In previous years, there were recommendations, but they were just at a low level.

Now we are having official discussions and have been consulting with the relevant ministries.”

The VN Index closed 1.2 per cent higher yesterday, led by banking, fuel and foodstuff as more investors stepped in to buy, hoping foreign ownership limits on listed firms would be lifted soon, traders said.

It was the biggest increase in Asia, at a one-week high of 520.9.

The gauge has climbed 26 per cent this year, at least 10 percentage points more than any other South-east Asian benchmark gauge tracked by Bloomberg.

The Jakarta Composite Index was the next best performer with a 16 per cent gain.

“Expectations are high,” said Mr Dominic Scriven, chief executive of Hồ Chí Minh City-based fund manager Dragon Capital.

“We would need to see exactly what comes out, but certainly there’s scope for the market to be positively impacted.”

About US$51 million of securities traded daily on average this year on the Hồ Chí Minh City Stock Exchange, the country’s main bourse, compared with US$1.34 billion for Singapore, according to Bloomberg data.

The VN Index has rallied 48 per cent since the start of last year as the central bank cut interest rates eight times and the government approved the formation of a debt asset management company to soak up banks’ bad loans that were hampering growth.

BLOOMBERG

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