Developing the fund industry, attracting sustainable capital flows to the stock market

VTV.vn - The development fund industry helps attract sustainable capital flows, improving the transparency and quality of Vietnam's stock market.

In the context of the stock market being upgraded, increasingly improving quality, meeting international standards and expanding opportunities for foreign investors, attracting sustainable capital flows into the market is an urgent need to help create stability, transparency and sustainability for the market. Therefore, the Ministry of Finance has recently approved the project "Restructuring investors and developing the securities investment fund industry", which specifically aims to develop the fund industry in the coming time to create quality investment needs and abundant and stable capital sources in the stock market. So what will be the strategy for restructuring investors, as well as developing the securities investment fund industry in the coming time, as well as what are the lessons learned from previous countries, so that the Vietnamese stock market can develop more and more strongly?

Discussing this issue in the Finance Street Talk Show on VTV8 , Mr. Lu Hui Hung, General Director of Phu Hung Fund Management Joint Stock Company, stated that restructuring investors and promoting the development of the fund industry in the coming time is very important when the market has developed to a new level, thereby creating sustainability and quality for the market, as well as increasing contributions to the economy in general.

Editor Khanh Ly : In the context of the stock market growing and reaching new heights, as a foreign investor who has accompanied the market for many years, how do you evaluate this?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: When I came to Vietnam more than ten years ago, the market had a lot of prospects and potential, but was still in its infancy. Today, the market has truly become a destination for international capital flows. This change is very impressive.

If you look at the numbers, the market capitalization has increased from about $35 billion in 2012 to nearly $300 billion today, equivalent to nearly 70% of GDP. This is not only an expansion in scale, but also a qualitative shift, reflecting an economy that has maintained an average growth rate of about 7% over the past 5 years and an increasingly mature and stable market.

What I appreciate most is that this growth momentum comes from improved transparency, structural reforms and consistent policy direction. Decision 3168 of the Ministry of Finance is a clear example of the determination to restructure the investor base, develop the fund industry and approach international standards. It is such a long-term vision that creates confidence for foreign investors and opens up more room for institutional capital to participate deeply in the market.

From my perspective, Vietnam is entering a breakthrough phase. The macro fundamentals are solid, investment demand is growing, and as infrastructure upgrades and market segmentation are completed, we will see a strong increase in foreign capital flows. Vietnam is not only catching up with the region, but is gradually taking the lead.

Editor Khanh Ly : So, in the new context, how do you evaluate the quality of investors in Vietnam today?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: The scale of investors in the Vietnamese stock market has grown rapidly in recent years, but if we look at the quality and structure, we still have a lot of room for improvement. Currently, individual investors account for about 80 to 85% of the market transaction value. This is a signal showing great public interest in the market, but at the same time it also creates volatility and makes the formation of long-term capital flows more difficult.

In more developed markets, the proportion of institutional investors such as pension funds, insurance companies and professional investment funds is often much larger. It is this group of investors that brings stability, discipline and long-term capital, which Vietnam needs for the next stage of development. Our fund industry has actually made significant progress. Currently, the country has more than 100 funds operating, along with strong growth in open-end funds. However, total assets under management are currently only about 6% of GDP, still quite modest compared to markets such as China at about 19% or Malaysia at more than 50%.

Therefore, the development of the fund management industry plays a very important role. Investment funds help to transfer people's savings to more professional investments, reduce risks for individuals, and increase liquidity and operational efficiency of the market. Decision 3168 has clearly stated this priority with orientations such as diversifying fund products, upgrading infrastructure and expanding distribution channels.

As the role of institutional investors is strengthened and the investor mix becomes more balanced, Vietnam will have a stronger foundation to attract domestic and international capital flows that are long-term and sustainable, contributing to growth momentum over decades, not just cyclical ones.

Mr. Lu Hui Hung talks with Editor Khanh Ly in the Financial Street Talk show.

Editor Khanh Ly: As you have seen, the Ministry of Finance has approved the project “Restructuring investors and developing the securities investment fund industry” to better suit the market development. So, in your opinion, what direction of fund industry development in the coming time will be suitable for the development of the Vietnamese stock market?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: I think this is a turning point for the fund industry in Vietnam. Decision 3168 is not just a policy, but more like a master plan for changing the way capital is mobilized and managed in the economy.

In the coming time, the development of the fund industry needs to focus on the following key orientations:

The first is to adapt to the development direction of the previous markets such as Korea or Taiwan (China). The goal is not to copy, but to adjust to suit the conditions of Vietnam. Taiwan (China) is a typical example. Their ETF market grew 32 times in just ten years, thanks to a good combination of developing a very effective index development system, combined with strong participation of organizations and convenient access to funds for individual investors.

Second , it is necessary to diversify fund products. Vietnam has a special advantage in the current period when digital transformation and financial awareness of investors are increasingly enhanced. This is an opportunity for us to overcome the limitations that other markets have encountered. At the same time, promote products such as thematic ETFs, bond ETFs and infrastructure funds along with money market funds; these are products that can attract long-term capital flows from insurance companies and pension funds earlier.

Third is to closely link the development of the fund industry with the goal of upgrading the market.

If we combine international experience with innovation specific to Vietnam, along with the orientation set out in Decision 3168, I believe that the fund industry will become an important driving force bringing long-term, sustainable capital flows to the stock market.

Editor Khanh Ly: In your opinion, with factors such as positive economic growth and market upgrade, how will the Vietnamese stock market develop in the coming time?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: Vietnam's stock market is entering an important transition period. With a solid foundation of economic growth and being upgraded to emerging market status by FTSE, we can expect clear changes from next year, especially the appearance of more international capital flows through ETFs and index funds.

This means that foreign capital flows will be more flexible, and capital inflows and outflows can happen quickly. Therefore, the most important thing for the market at this time is to have stable and long-term capital flows. The fund industry will play a key role in creating that stability. Greater participation from pension funds, insurance funds and domestic institutions will help balance short-term fluctuations when foreign capital flows increase.

Looking ahead to the next 5 to 10 years, I believe the outlook is very positive. Vietnam is undertaking very deep structural reforms, aiming for GDP growth of over 10% in the coming time. We are also aiming to be upgraded by MSCI by 2030, and the Government is taking concrete steps such as applying IFRS to improve information disclosure standards, simplifying processes and opening up more to foreign investors.

If we stick to this path, the market could see dramatic changes: improved corporate profits, rising valuations, and a more sustainable market. That is the biggest opportunity for investors in the future.

Editor Khanh Ly: In that context, what development strategies should managers have for the Vietnamese stock market?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: In my opinion, there are two strategies that the regulator can prioritize to promote the development of the capital market in the coming period, and both are in line with the orientation of Decision 3168.

The first is to improve the effectiveness of investor education through coordination and integration of resources. Currently, most programs are implemented by the Securities Commission together with organizations in the market, but as Vietnam enters a new stage of development, it has the opportunity to build a more consistent and long-term program framework, with stable resources. For example, many markets in the world have established an investor education department under the management agency, with a part of the funding coming from industry contributions.

The second is to improve the legal framework to expand distribution channels and the level of market participation of investors. Commercial banks in Vietnam have a very wide coverage and are natural distribution channels for fund products. However, with current regulations, investors still have to open separate accounts at each fund management company, making access through banks less convenient. A possible direction for reference is a mechanism based on the trust law, similar to what Taiwan (China) has implemented since the 2000s. In fact, with just one account at any bank, investors can access all fund products on the market.

If we focus on two directions: investor education and improving the legal framework, we will have a more open, more efficient and more sustainable capital market.

Editor Khanh Ly: As a member of the Vietnamese stock market, what strategies does your company continue to have to contribute to the development of the Vietnamese stock market in the coming time?

Mr. Lu Hui Hung , General Director, Phu Hung Fund Management Joint Stock Company: I have been involved in the Vietnamese capital market for 14 years, and that journey has shown me one thing very clearly: this market is growing faster than most of us ever imagined. From scale to depth, the market has grown more than ten times, and more importantly, the quality is improving. At Phu Hung Fund Management Joint Stock Company (PHFM), our biggest goal has always been consistent: helping Vietnamese investors benefit sustainably from the growth of the market, while making a practical contribution to the development of the fund industry.

We believe that for the fund industry to thrive, a good market foundation is needed first. This includes diversifying investment products, improving the legal framework and expanding distribution channels. In addition, long-term investor education is key to changing investment habits, helping people accumulate assets in a more stable and disciplined way.

PHFM has been continuously contributing to the development of the fund industry through product innovation and financial education programs. For example, we are currently planning to launch the first Smart Beta ETF, simulating the VNSHINE index recently announced by HOSE, a new milestone for the Vietnamese ETF market. We are also cooperating with major media platforms to bring investment and asset management knowledge closer to the public.

As the Government implements the objectives in Decision 3168, we will continue to accompany it by strengthening the current strategy and proactively adapting to improvements in the legal framework and market structure.

Editor Khanh Ly: Thank you for the above information!

Source: https://vtv.vn/phat-trien-nganh-quy-thu-hut-dong-von-ben-vung-cho-thi-truong-chung-khoan-100251125092834087.htm