Investors observe market developments at a securities trading floor in Viet Nam. The domestic market is expected to become an emerging market in a near future. — Photos vietstock.vn

Domestic stock market authorities hope the local bourse will become an emerging market in the near future.

HCM City Stock Exchange (HOSE) chairman Tran Dac Sinh talked with news website ndh.vn about this on the sidelines of Gateway to Vietnam, an investment conference which Saigon Securities Inc recently held in HCM City.

Tran Dac Sinh

The Vietnamese bourse is witnessing a big opportunity to transform from a frontier market to an emerging market. What is our deficiency and what do we need to create right now?

There are a lot of things that we have to do. First, we need to upgrade technical infrastructure and complete technology systems. These must include modern transaction and depository systems.

Second, we need enterprises and transactions that are large enough. Currently, the domestic market sees only eight to nine companies each having an average share trading value of US$1 million per day, and these numbers should be increased.

Third, we need to have stock derivatives and things like covered warrants and exchange traded funds (ETFs) to improve market liquidity.

Those are what the State Securities Commission (SSC) and market members are doing. I hope that we will have enough conditions to uplift the bourse to the level of an emerging market by the end of next year.

A derivatives market is expected to be available in 2016. Will we have enough conditions for the market upgrade by the end of 2015, then?

The HOSE has invested in a modern information technology project that costs more than $30 million and is to be completed by the end of next year. It will also serve the operations of the Ha Noi Stock Exchange and the Viet Nam Securities Depository. When the project is finished, it will help us meet the legal requirements for a derivatives market. The market will be operating with full types of products in 2016, and an upgrade is achievable.

Who is implementing the project?

We put the project out to tender and selected a South Korean contractor. The information technology package is among the most advanced systems in the world, with full products for developed markets, and can be used in at least 20 years. The Ministry of Finance and the SSC have adopted the use of its functions.

The domestic market is preparing to advance by leaps and bounds. Are investors ready for that?

Helping investors understand new products and ways of investment in a new market is very important. We have opened many classes to train investors, securities companies and press agencies so they can understand how to invest in the ETFs.

Viet Nam's first ETF product, VFMVN30, will be listed on the HOSE on September 25. This will be a breakthrough for the domestic market, and more ETFs will be developed after that.

Earlier this year, investors had high hopes of a bigger room for foreign investor stakes in domestic companies, which might be raised from 49 per cent to 60 per cent. It seems that this has sunk into oblivion. Is this true?

An increase in room space is important and necessary, but comprehensive laws haven't yet been put in place for that. Viet Nam needs to study the revision of the legal framework before taking the room increase into account. I don't think this can be done overnight.

What are your expectations of market developments in the coming months?

I hope market growth will be better in 2015 than in 2013 and 2014, especially in market value, with a deeper contribution from investors and more emerging products.

We plan to launch covered warrants, an attractive investment product in emerging markets. The HOSE has submitted this plan to the SSC to prepare the legal framework for implementing it. — VNS