Experts urge lifting of foreign ownership caps

Experts urge lifting of foreign ownership caps

The statement was made by Yen Chen Hui, Chief Strategy Officer of Yuanta Securities Investment Consulting Co, during an online seminar themed “Stock market, an overview from the region to Viet Nam, and post-pandemic opportunities”, held on Tuesday by Yuanta Vietnam Securities Co.

Chen Hui said that for foreign investors, Viet Nam’s stock market had a lot of investment potential but there were two points that need improvement.

Viet Nam needed to ease foreign ownership caps as it was difficult for foreign investors to find a good stock with “room” for investment, such as FPT shares. This was a good stock but foreign investors could not buy more, he said.

The second problem was that listed businesses on the stock market in Viet Nam were still mostly involved in traditional business. The country needed to encourage entrepreneurship in more trendy and revolutionary industries to fit in the new era, he said.

Nguyen The Minh, director of Analysis Division at Yuanta Vietnam Securities Co., also shared the same view.

“Foreign ownership is an issue for foreign investors when they want to invest in Viet Nam’s stock market. Market capitalisation of listed companies remains small when compared to those in regional markets,” he said.

“Foreign investors also pay much attention to banking stocks and seek more investment opportunities in this group but they are still hindered by the limits in foreign ownership,” Minh said.

According to this expert, in the last three years, Viet Nam’s banking system has been improved significantly, becoming more resilient from external “shocks”.

“Therefore, foreign investors highly value the management of the banking system and really wish to increase their ownership in bank stocks. But the foreign ownership cap makes it more difficult to attract foreign capital.

“Even State-owned banks want to increase capital to meet Basel II standards as required. The participation of strategic investment funds at these banks is limited because of the barriers in foreign ownership.

“Investors do really hope that in the near future the equitisation and listing of State-owned enterprises will be accelerated because this group of businesses has a strong financial background and plays a key role in the Vietnamese economy.

“The expansion in foreign ownership is also a prerequisite issue for Viet Nam to get upgraded to the “emerging market” status from its current “frontier market” level. The Government needs to take this issue into serious consideration, especially removing the caps in the banking sector,” Minh said.

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