Removing obstacles to investment in the stock market in the capital region to boost growth objectives
Vietnam is embarking on a comprehensive reform journey to transform its stock market from a Frontier Market to an Emerging Market by 2027. The aim is to enhance market transparency, stability, and long-term capital mobilization.
Deputy Minister of Finance Nguyen Duc Chi has emphasized the need to address legal bottlenecks and elevate market quality. Vice Chairman of the State Securities Commission (SSC), Buì Hoàng Haì, stated that Vietnam has made significant progress towards meeting the criteria for an upgrade.
Key Reforms
The reforms focus on improving market transparency, stability, and long-term capital mobilization. Key initiatives include:
- Central Counterparty Mechanism (CCP): The State Securities Commission plans to launch a CCP subsidiary under the Vietnam Securities Depository and Clearing Centre by early 2027. This move is expected to improve market stability and investor confidence by reducing counterparty risk.
- Legal and Regulatory Framework Overhaul: The government is finalizing improvements to the legal framework, including amendments to enterprise laws that increase ownership transparency. The Amended Law on Enterprises (effective July 2025) introduces formal recognition of beneficial owners with clear definitions of equity ownership and control rights, aligning Vietnam’s corporate governance with international standards on transparency and anti-money laundering.
- Four-Phase Reform Plan: Vietnam has a structured roadmap comprising four phases through 2027 designed around regulatory upgrades, market infrastructure development, and governance improvements. This plan is supported by international entities such as FTSE Russell and the World Bank and aims to meet criteria required for emerging market classification.
- Foreign Investment Facilitation: Achieving emerging market status is expected to unlock approximately US$5 billion in foreign capital inflows, particularly from institutional investors, family offices, and investment funds previously limited by its frontier market status.
- Administrative and Economic Policy Reforms: Broader government reforms, including cutting red tape, lowering transaction costs, and improving economic growth prospects, complement stock market reforms to create a more attractive investment environment conducive to long-term capital formation.
Moving Forward
Regulatory clarity, institutional strengthening, product diversification, and infrastructure enhancements are essential to mobilize new capital flows and position the market as a cornerstone of Vietnam's economic trajectory. Legislative reviews should identify specific shortcomings in the current Law on Securities (2019) and proposed amendments for 2024.
Enhancing the balance between institutional and retail investors was emphasized, with a need for both increased institutional participation and improved financial literacy and investor education for retail investors. The HoSE is expanding the range of indices to provide a foundation for new products and services that meet emerging market needs.
Tran Anh Dao, deputy CEO in charge of operating the Ho Chi Minh Stock Exchange (HoSE), shared updates on ongoing initiatives, including aligning the IPO process with listing procedures under Decree 155. While hard criteria have been fulfilled, soft criteria, such as the experience of foreign investors, still depend on practical improvements in the market.
Proposed solutions for enhancing the Vietnam stock market include the development of new financial products and the consideration of allowing foreign-invested enterprises to list on the country's exchanges. The stock market has grown from zero to its current size over the course of 25 years and has a capitalization that exceeds 60% of the country's GDP.
As the deputy finance minister stated, unlocking new capital is the right requirement, with the right content, at the right time for investors, enterprises, and policymakers alike.
- To ensure the success of Vietnam's stock market transformation, regulatory clarity and institutional strengthening are essential, as highlighted by Deputy Minister of Finance Nguyen Duc Chi.
- Enhancing the balance between institutional and retail investors is crucial, with a need for both increased institutional participation and improved financial literacy and investor education for retail investors, an emphasis shared by Tran Anh Dao, deputy CEO of the Ho Chi Minh Stock Exchange.
- The HoSE is expanding its range of indices to provide a foundation for new products and services that meet emerging market needs, a step towards achieving this balance.
- Proposed solutions for further growth include the development of new financial products and the consideration of allowing foreign-invested enterprises to list on the country's exchanges.
- The stock market, with a capitalization that exceeds 60% of the country's GDP, has grown from zero to its current size over the course of 25 years and serves as a cornerstone of Vietnam's economic trajectory.
- Deputy Minister of Finance Nguyen Duc Chi emphasized that unlocking new capital is the right requirement, with the right content, at the right time for investors, enterprises, and policymakers alike.
