Vietnamese Gov’t shows commitments to ensure healthy development of stock market: Expert

Vice Director of Vietnam Construction Securities Company Do Bao Ngoc told The Hanoi Times of his expectation regarding the stock market’s prospects following recent efforts from the Government to ensure its healthy development.

Vice Director of Vietnam Construction Securities Company Do Bao Ngoc.

 What is your view on the Government’s recent actions to restore order in the stock and bond markets?

One of the key factors leading to the downtrend of the market in the past days was investors’  cautiousness after negative information from certain enterprises. Specifically, the arrest of key executives of FLC Group, Louis Holdings, or Tri Viet Securities for alleged market manipulation or of Tan Hoang Minh Group for the appropriation of assets by deceit and hiding information have shaken the belief of investors in the market.

As such, the effort to ensure transparency in the market would be the provision of clear and accurate information by the regulators, namely the Ministry of Finance, the State Securities Commission of Vietnam, or the Ministry of Public Security.

In the past months, I think the Government has been stepping up efforts in dealing with unlawful practices in the market, which is going in the right direction.

There has been concern that drastic measures from the Government have prompted investors to sell out their stocks. What are your recommendations to them during this volatile period?

Trust and information are key factors of the stock market, so it is inevitable that recent arrests have affected investors’ sentiment and subsequently triggered a wave of selling out small-cap stocks.

But at the same time, this would be an opportunity for the capital to shift to those with high potential for growth and solid fundamentals in 2022.

For investors, only those with knowledge, discipline, and patience could survive this turbulent period.

Investors’ sell-out has resulted in plummeting prices of stocks, which shows investors’ weak confidence in the market. What should the authorities focus on in this situation?

Vietnam’s stock market continues to face multiple challenges, especially issues of market manipulation or a preference for speculative stocks. The majority of investors are attracted to these stocks with promises of high returns but eventually may end up losing and unable to recoup losses.

However, there are always speculative investments in the market, and the lack of discipline in market management would lead to rampant fraud against new investors and undermine the sustainability of the market.

I expect the strong action from the Government would cleanse the market and put it back on the right track.

Another priority is to push for a higher market rating, for which the Government has set the target of upgrading the stock market to an emerging status before 2025. This would be key to further attracting investment capital, as the market continues to be one of the main capital mobilization channels for compliant businesses.

What are the solutions to ensure the transparent and healthy development of the market?

Firstly, the authorities should promote new products and services for the market, such as intraday trading or derivative products. A market with diversified products means there are sufficient instruments for investors to lower risks.

Secondly, the Government’s push for privatization of state-owned enterprises would offer new investment opportunities to investors.

These are the quality products that the market needs. With a growing number of firms listing on the stock market, its size would be expanded and help attract investment from foreign investors.

Thirdly, Vietnam may consider expanding the ownership limit for foreign investors and easing conditional business lines to open the doors for investments.

Thank you for your time!