Only eight of 800 listed firms have a market capitalisation of more than US$1 billion, while Thailand has 23 such firms, according to Sinh. — Photo vinacorp

HCM CITY (Biz Hub) — The stock market needs to address shortcomings, mostly to do with the dearth of investment options and size, to attract foreign investors, the chairman of the HCM Stock Exchange has said.

Speaking at a recent seminar on the country's capital market, Tran Dac Sinh listed the unavailability of derivatives, the narrow daily price band, and small size of listed companies as the main drawbacks.

Only eight of 800 listed firms have a market capitalisation of more than US$1 billion, while Thailand has 23 such firms, according to Sinh.

Major international institutional investors preferred markets with large market caps and which have average trading of US$1 billion a day, he said, pointing out that Viet Nam's average figure was only $100 million.

The band within which stocks are traded daily is 10 per cent in Shanghai, 15 per cent in Korea, and 30 per cent in Thailand, Malaysia, and Japan, while it is just 5 per cent in HCM City and 7 per cent in Ha Noi, according to Sinh.

The foreign ownership cap is still low (49 per cent in a company and down to 30 per cent in a bank), and this too acts as a drag on foreign investment.

In some cases foreign investors have to buy through deals outside the exchange at 20-30 per cent higher than market price.

He called for simplifying procedures for foreigners seeking to open trading accounts.

In an article he wrote in Dau tu Chung khoan (securities investment) magazine, Christian Kamm, chairman of HCM City-based investment consultancy Kamm Investment, said foreign investors are happy with a draft regulation increasing foreign ownership to 60 per cent, especially in terms of the Government's attitude towards foreign investors.

They realise that the government is well aware of not only the importance of the stock market to economic development but also the necessity of maintaining foreign investors' interest.

Setting up the Vietnam Assets Management Company helped increase credit growth, stimulating the economy and attracting foreign investors' attention, he said.

They trusted the government's determination to resolve the bad debts problem plaguing the banking system, he added. — VNS