New Year for Vietnam’s stock market

	Expectations for the stock market in 2020
	Vietnam’s stock market: A bright spot in Southeast Asia
	Foreign investors interested in Vietnamese stock market

2020 is expected to be a boom year for Vietnam’s stock market

Difficulties

During the second half of 2019, capital markets in many countries wobbled due to the US-China trade war. Of course, Vietnam's stocks were impacted, but compared to other countries in the world or the region, the impact on Vietnam was not much.

Looking back at market movements, there were times when the VN-Index was in danger of collapse when key technical support levels were penetrated, but the market always received positive sign that brought calm.

At times, there were no buyers on the Vietnamese stock market, but it still quickly recovered momentum in the following sessions, showing strong demand to join the market when sellers panicked, stopping downward momentum like in previous years. Looking at this result, it can be seen that, besides the different causes of the Vietnam’s economic intrinsic, it is also partly due to the Government's effective reassurance and timely actions of the State Securities Commission and, most importantly, the trust of investors in Vietnam’s stock market.

In the same context, at the end of September 2019, FTSE Russell - London-based global stock index organisation published a ranking list of stock markets. At this review, Vietnam failed to be upgraded to secondary emerging market status and it will be reevaluated at the annual review on September 2020. However, this review of FTSE did not have a great impact on the market, even the Vietnam's stock market was even more positive, because it was forecasted previously. Happily, FTSE Russell recognised Vietnam's efforts in improving and developing the capital market. It also noted Vietnam's constructive feedback to the organisation over the years.

Market ranking organisations are usually carried out independently and objectively based on actual evaluation of investors when considering upgrading. Therefore, the decision to upgrade any market takes a long time and is also a time for countries to improve. Being upgraded by FTSE and MSCI is a major goal for Vietnamese securities. Although the results were not as expected, FTSE Russell's assessments showed during the past time, many efforts from authorities have been implemented. Vietnam’s stock market has achieved seven out of nine important criteria to be upgraded. Only two criteria have not been achieved in the review period, which is the solvency guarantee activity because there is no mechanism for checking before trading hours and the "Clearing and Payment -T+2/T+3".

The Ministry of Finance and the State Securities Commission are carrying out activities to meet the two remaining criteria set by the rating organisations. Continuing to be on the watch list and knowing where to improve will help authorities see the roadmap. Normally, markets on the list of upgrades take several years to be upgraded, for example Romania took three years, so for Vietnam to be on the watch list just for a year is not a worry.

Steadiness

2019 was a memorable milestone for Vietnam's stock market because the Law on Securities (amended) was officially adopted by the National Assembly in the context that the previous law did not have enough "power" to follow the market. After more than two years of taking completing it, the new Securities Law has updated changes and developments of the international stock market and has been more flexible to meet requirements for the development of Vietnam’s stock market.

According to economic expert and lawyer Bui Quang Tin, Vietnam's stock market has changed significantly since the first Securities Law was issued in 2006, with the introduction of many financial products such as derivatives and stock indices which are more sophisticated. The Securities Law (amended) will help the stock market and its members be more confident when trading such products.

“This new legal framework will allow authorities such as the State Securities Commission to have appropriate control methods, helping Vietnam’s stock market develop, especially toprotect the interests of investors and prevent the risk of market collapse,” said Bui Quang Tin.

Robert Strahota - legal consultant of LuxDev - Financial capacity enhancement project (a project of the Luxembourg government implemented since 2017) participated in the process of helping the State Securities Commission complete the legal framework to adjust the securities market. Closely following the process of developing and revising drafts of the Securities Law (amended), Strahota said the State Securities Commission of Vietnam is a member of the International Organization of Securities Commissions (IOSOC) along with more than 100 securities committees from other countries. As a member, the State Securities Commission of Vietnam has made every effort to apply laws and regulations in accordance with the best practice recommendations made by IOSOC.

“There are a number of provisions in the law that will handle issues such as international and domestic cooperation and enforcement of securities and compliance issues. There are some changes in the new law on the Vietnam Securities Depository Center to carry out securities depository and payment activities in Vietnam. I think this is a very positive development to build market confidence,” the expert said.

After nearly 20 years of formation and booming, 2020 is probably the ripe time of the market. This is reflected in the strong legal basis, the Government's interest in this field as well as the management of the Ministry of Finance. A stronger securities law such as the Securities Law (amended) will help increase confidence of investors and make it easier for Vietnam's stock market to supplement missing services, meeting upgraded criteria in the near future. The "New Year" of the Vietnamese capital market is almost coming with the intersection of trust, potential, opportunity, and that moment will be the "blooming" of the whole market.