Accelerating the Vietnamese stock market

Dr. Tran Thang Long, Director of Analysis, BIDV Securities Joint Stock Company (BSC)

Launch pad for sustainable development

Dr. Tran Thang Long, Director of Analysis at BIDV Securities Company (BSC), said that the KRX trading system has met the great expectations of many investors since it officially came into operation. Although the size of the Vietnamese stock market is currently only marginal, the trading volume is almost equivalent to that of some secondary emerging markets. With such a large trading volume, the old system encountered many obstacles, making technology upgrading an urgent requirement. According to a survey by BSC, both domestic and foreign investors have great confidence in KRX, considering it an important step forward to meet the growing trading demand and modernize the Vietnamese stock market.

According to Dr. Tran Thang Long, although the initial phase has not yet deployed new trading tools, the operation of KRX has created a solid foundation for advanced trading methods and products in the future. In particular, the CCP clearing center, which can be deployed based on the new system, plays a prerequisite role in developing solutions such as options contracts or T+0 transactions. Although international partners have not mentioned much about the Vietnamese market, CCP is an important factor to pave the way for further reforms. It is reasonable not to launch new products immediately, because it takes time for management agencies, operators, market members, and investors to get used to the changes of the new system, thereby ensuring stability before integrating modern trading tools, Mr. Long emphasized.

Dr. Tran Thang Long also commented that the global stock market shows that technology is a key factor in promoting dynamism and growth. Countries from frontier markets to secondary emerging or developed markets must upgrade their trading systems. BSC has monitored markets such as the UAE, Qatar, Taiwan, and South Korea, where liquidity has improved significantly in the short term when applying new products based on modern technology. For example, in Taiwan in the period of 2014-2015, trading value increased by 26%. In South Korea, according to reports from the Bank of Korea and KRX, trading value increased 4 times and trading volume increased 13 times from 1997-2003, when the country implemented many market development solutions, in addition to upgrading the trading system. To achieve sustainable liquidity in the long term, synchronous solutions are needed such as increasing the supply of large corporate stocks and policies to attract international investors, he emphasized.

Market Upgrading: Opportunities and Challenges

Dr. Tran Thang Long affirmed that KRX brings many expectations to the Vietnamese stock market, but also comes with challenges that need to be strictly managed. In the long term, market volatility will increase when applying the new trading system, as investors tend to trade more with new products and tools. Investors need time to prepare, monitor developments, and learn from experience to effectively control risks. The world stock market is highly synchronized, making Vietnam affected by the trade policies of major countries such as the United States, China, the EU, and Japan. Listed enterprises, especially in the export sector, are re-evaluating their strategies and waiting for the results of tax negotiations. If the negotiations achieve a tax rate lower than 46%, enterprises will have a basis to expand investment or sign contracts.

Dr. Tran Thang Long forecasts that this year's business results will still recover, but at a lower level than previously forecast. Diversification between industry groups and stocks has begun to appear. Policies to promote public investment, with large infrastructure projects, along with efforts to increase consumption and the private economy, will help related industry groups perform positively, thereby promoting transactions and the VN-Index score in the coming time. These dynamics, combined with the KRX technology platform, create opportunities for the Vietnamese stock market to consolidate its position and move closer to the upgrading criteria.

Dr. Tran Thang Long emphasized that to realize expectations, market members need to coordinate synchronously. From the management agency's side, the early issuance of guidance documents is very important, because the new system will bring many changes. Securities companies need official documents to train employees and support investors to better understand KRX.

Regarding market upgrade, the two credit rating organizations FTSE and MSCI have different criteria. According to the discussion with FTSE, KRX is not a prerequisite for upgrading, but it is an important point. For MSCI, KRX is almost a prerequisite in the evaluation process. If MSCI's criteria are met, the number and scale of investment funds participating in the Vietnamese market will increase significantly, he said. The operation of KRX brings Vietnam closer to the upgrading criteria, creating momentum for the market to be recognized as an emerging market in the near future.

Dr. Tran Thang Long recommends that investors also play an important role in taking advantage of opportunities from KRX. They need to prepare mentally and knowledgeablely to adapt to new trading tools, while managing risks in the context of increased volatility. The cooperation of management agencies, securities companies, and investors will determine the level of success of KRX in raising the level of the Vietnamese stock market.

Shaping the modern stock market

According to Dr. Tran Thang Long, the KRX system is an important milestone, opening a new era for the Vietnamese stock market. With the potential to deploy modern tools, increase liquidity, and attract international investors, KRX lays the foundation for the goal of upgrading the market. Lessons from markets such as Taiwan and South Korea show that technology and synchronized solutions can change the face of the market, and Vietnam is on the right track.

However, to turn potential into reality, it requires close coordination between management agencies with timely guidance documents, securities companies with careful preparation, and investors with a sense of learning. With the right steps, the Vietnamese stock market will not only meet expectations but also affirm its position on the global financial map.

Source: https://thoibaonganhang.vn/tang-toc-cho-thi-truong-chung-khoan-viet-163927.html