Vietnam stock market capitalisation to hit 70pct of GDP

Capitalisation of domestic stock markets is expected to reach 70-100 percent of gross domestic product (GDP) by 2020, says the deputy head of the fund management section of the State Securities Commission, Nguyen Thanh Long.

The figure has also been targeted in the commission’s 2011-20 project for development of the nation’s stock markets, recently submitted for approval by the prime minister, Long told reporters.

The markets have achieved significant growth in the past 10 years, and would reach growth objectives for the next decade by increasing market scale, improving volumes, restructuring market organisation, and updating market infrastructure, he said.

Enhancing governance capacity and completing the legal framework for the market were also necessary to achieve these objectives, he added. A disclosure regime was a top priority and would be based on the amount of an enterprise’s equity and its number of shareholders.

During 2011-13, the commission would concentrate on amending the current Law on Securities with the aim of passing a second-generation Law on Securities Act in 2015 which would support more open market conditions, he said.

Institutional investors would provide a breakthrough for sustainable growth of the markets, Long added. “A system of investment funds including open-ended, closed-ended and exchange-traded funds will draw a lot of attention.”

Thang Long Securities Co director Le Dinh Ngoc said that the first 10 years were an important, formative period for the markets.

“However, the legal framework is incomplete, while the appearance of the market has already changed a lot,” Ngoc said.

Vietnam Association for Business Securities general secretary Nguyen Thanh Ky concurred, saying that a lack of transparency remained the greatest obstacle to further market development.

“In the next 10 years, a proper government orientation will help market develop more strongly,” he said, adding that more open policies would encourage greater participation from business and financial institutions.

Tags: Vietnam business, Vietnam companies