Collaboration with MSCI and FTSE Russell: State Bank works towards upgrading stock market

Friday, Mar 01, 2024 02:46

Deputy Governor of the State Bank of Việt Nam, Phạm Thanh Hà, speaks at a conference to discuss the development of the stock market in 2024 at the Government Office on Wednesday in Hà Nội. — VNA/VNS Photo

The State Bank of Việt Nam has actively collaborated with two renowned rating organisations, MSCI and FTSE Russell, to address inquiries and concerns related to the banking sector. The aim is to facilitate the prompt upgrading of Việt Nam's stock market.

The statement was made by Deputy Governor of the State Bank of Việt Nam, Phạm Thanh Hà, at a conference to discuss the development of the stock market in 2024 at the Government Office on Wednesday in Hà Nội.

Currently, the Việt Nam Stock Market is categorised as a Frontier Market, according to both MSCI and FTSE Russell.

Notably, FTSE Russell has included Việt Nam in the list of countries awaiting an upgrade to an Emerging Market.

The State Bank of Việt Nam (SBV) has shown great interest and is proactively cooperating with the Ministry of Finance on finding solutions to support the stock market's upgrade.

"The SBV has closely worked with the two rating organisations to answer investor queries and tackle concerns related to the banking sector. We have also focused on developing the foreign exchange market and providing foreign exchange liquidity when necessary to meet the growing demands of investors, especially foreign ones," Hà said.

"The SBV remained committed to closely monitoring market trends, both domestic and international economic situations, and maintaining strong coordination with fiscal policies. This approach ensures proactive, flexible, and harmonised management of monetary tools and policy solutions. The aim is to control inflation, contribute to macroeconomic stability, and foster sustainable economic growth," he said.

According to Hà, to achieve synchronised, transparent and sustainable financial market development while ensuring stable and secure stock market operation, the SBV recommends three key solution groups to the Ministry of Finance and the State Securities Commission.

Continued research, review and enhancement of the legal framework for the stock market is needed. This will create a conducive environment for securities companies to issue stocks and bonds in the market. Additionally, close coordination with relevant ministries and agencies will be vital to implement synchronised solutions for stock market development.

He stressed the diversification of types of investors in the market by encouraging the active participation of funds, insurance companies, foreign investors and other entities. This will help broaden and deepen market engagement.

Close and effective communication between the Ministry of Finance and the SBV is crucial to strengthen coordination between monetary and fiscal policies. This collaboration will facilitate a comprehensive approach to managing the financial market. 

Despite being classified as a Frontier Market by global market rating organisations, there is a growing perception among foreign investors that the Việt Nam Stock Market is an emerging market, said Việt Nam's Chairman of HSC Securities Company, Johan Nyvene.

Việt Nam has demonstrated positive aspects such as economic growth and a stable socio-political environment, leading to high evaluations of its national credit rating by international organisations. Currently, the Việt Nam Stock Market's trading exchanges are members of the World Federation of Exchanges (WFE) and its legal framework meets the standards followed by developed markets, Johan said.

In order to further advance the market, it is necessary to consider adjusting or removing the requirement for pre-trading collateral, particularly for foreign institutional investors. Such a change would enhance the market's appeal to foreign institutional investors and facilitate the upgrade of Việt Nam's stock market.

Improving and strengthening the disclosure of information in English by regulatory agencies, listed companies and market participants is also crucial. This includes timely communication with listed companies to ensure they understand the benefits of English disclosure and proactively update information, he said.

Dominic Scriven, Chairman of the Board of Directors of Dragon Capital Việt Nam, emphasised the significant functions of the stock market. It serves as a vital channel for capital flow for both the government and businesses.

The stock market helps assess the quality of businesses and their commercial operations. The presence of financially transparent companies with confirmed non-risk interest rates is key to ensuring Việt Nam's long-term capital value, he said. — VNS

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