Vietnamese Stocks: The most active cash flow, the highest risk in the region

Developing the investment fund industry is an urgent solution to help reduce risks and increase the sustainability of the Vietnamese stock market.

Experts discuss the development of the fund industry, promoting professional investment, contributing to reducing risks, towards a sustainable stock market - Photo: BONG MAI

Reduce the risk of erratic "hot - cold" stock market fluctuations

Mr. Bui Hoang Hai - Vice Chairman of the State Securities Commission (SSC) - said that individual investors currently account for 99% of the total number of accounts and about 85% of the transaction value on the Vietnamese stock market.

Thanks to that, the transaction volume is always the most vibrant in Southeast Asia. However, the downside is that the level of volatility and risk is higher than the regional average. Due to the high market risk, the cost that Vietnamese enterprises have to pay for raising capital through the stock market is also higher.

"Developing investment activities through funds is a way to reduce fluctuations, diversify risks and help businesses mobilize capital more effectively," Mr. Hai shared at the conference "Fund industry in the process of developing the stock market and attracting indirect investment flows into Vietnam", which took place on October 17.

According to the vice president of SSC, Vietnamese securities have just been upgraded to a secondary emerging market, an important foundation for continuing extensive reforms, towards more modernity, transparency and sustainability.

Currently, the asset value of the fund management industry in Vietnam is only equivalent to about 6% of Vietnam's GDP, much lower than the 30-50% level in markets such as Thailand, Taiwan, China..., showing that there is still a lot of room for development.

For Vietnam, the target is for the total net asset value (NAV) of securities investment funds to reach 5% of GDP by 2030. The number of investors holding fund certificates will reach 2.5 million (2030) and 5 million (2035).

At the same time, the investor structure will shift from 85% individuals at present to 60-70% individuals, 30-40% organizations and foreigners. The number of investment funds will increase from 130 to 500 funds by 2030, maintaining a growth rate of 25%/year.

In this development process, Mr. Hoang Hai noted that information transparency and improving financial literacy are considered key factors.

Opening the door to attract billions of dollars in capital flows into Vietnam through investment funds

Minister of Finance Nguyen Van Thang - Photo: BONG MAI

From the experience of Korea, one of the five largest open-end fund (ETF) markets in the world with 1,029 funds and total assets of 178 billion USD, Mr. Hyun DongSik - Chairman of the Board of Directors of KIM Vietnam Fund Management Company - said that the ETF boom in Korea is driven by the strong participation of individual and foreign investors, along with factors of low costs, high transparency, and diverse distribution channels...

The KIM Fund proposed that Vietnam should simplify the process of establishing open-ended funds and ETFs, and encourage international organizations to participate in building domestic indexes. Consider developing gold ETFs and gold derivatives to diversify the portfolio and limit the risk of foreign currency loss.

Citing Taiwan's experience, Mr. Wang Jiunn Shyong - Chairman of the Board of Directors of Phu Hung Securities - proposed that Vietnam take advantage of the banking and insurance network to expand investment fund distribution channels, while speeding up IPOs of large enterprises and expanding "room" for foreign investors to attract more indirect capital flows.

Mr. Rajeev Tummala - Director of Digital Transformation for Asia, Middle East and North Africa (HSBC) - commented that Vietnam is in a favorable period, when personal financial assets are expected to increase by 11% per year in the period 2022 - 2027, but only 0.26% of the population invests through funds, showing a huge room for the asset management market.

Completing the legal framework

Listening to opinions and suggestions at the conference, Minister of Finance Nguyen Van Thang said that the Ministry will absorb appropriate content to perfect the legal framework and advise on major policies for the Party and State.

The Minister requested the State Securities Commission to focus on implementing key solutions such as developing the capital market towards upgrading. Completing the legal framework for investment funds and pension funds. Diversifying risk prevention products to attract foreign capital flows. At the same time, strengthening supervision and strictly handling violations. Promoting training and disseminating knowledge to individual investors.

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Source: https://tuoitre.vn/chung-khoan-viet-dong-tien-giao-dich-soi-dong-bac-nhat-rui-ro-cung-hang-dau-khu-vuc-20251017145538085.htm