HANOI: Vietnam has taken steps to make it easier for foreign investors to access its stock market by allowing them to purchase shares of local companies via international brokerages, the finance ministry announced, removing a long-standing barrier to entry into the rapidly expanding Asian market.
The move comes after Vietnam’s benchmark stock index jumped by more than 40 per cent last year, even as the country faced fresh 20 per cent tariffs on exports to its largest trading partner, the United States.
The relaxation of investment rules also precedes Vietnam’s anticipated upgrade to emerging market status by FTSE Russell, which would allow Vietnamese equities to be included in its indices as early as September.
Under the new policy, foreign investors are no longer required to open trading accounts directly with domestic securities firms, the finance ministry said on Tuesday.
Tran Hoang Son, market strategy director at VPBank Securities Company in Hanoi, said the changes help “reduce technical barriers and administrative procedures… making the Vietnamese market more accessible to foreign capital”.
“These reforms serve as necessary conditions to activate medium and long-term foreign capital flows,” he added.
The updated regulations, however, do not affect existing limits on foreign ownership, which remain in place.
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FTSE Russell announced in October that Vietnam would be reclassified as a “secondary emerging market”, placing it in the same category as China and India. The upgrade from its current “frontier” status, subject to an interim review in March, is set to take effect in September.
Vietnam was first placed on FTSE Russell’s watch list for a potential upgrade in 2018 and has since implemented broad market reforms, including the removal of certain foreign ownership caps for listed companies.
The index provider estimates that the reclassification could attract up to US$6 billion in capital inflows.
Despite the imposition of new 20 per cent tariffs by US President Donald Trump, Vietnam’s economy has shown notable resilience, recording growth of eight per cent last year — among the strongest in Asia.
– AFP
-TheStar
