Dominic Scriven also wants the State Bank of Vietnam (SBV) to be bolder in divestment, accepting to sell more shares to create conditions for enterprises to reform their management system.
Speaking at the Conference on deploying of development mission for Stock Market in 2019 on February 22, Dominic Scriven, Chair of Dragon Capital, said that in 2018, there were fluctuations in politics, economy, climate and global environment, Vietnam stock market remained relatively stable although VN Index slightly decreased.
The quality of governance and transparency in public companies has been improved constantly, affecting the trust of domestic and foreign investors. Business value premises are generally appropriate and standard.
While foreign investors significantly withdraw capital in other regional countries, Vietnam still attracts relatively foreign capital inflows into the market. The real interest rate that the budget has to bear on national loans has dropped significantly, unprecedented low, creating a positive effect on borrowing costs.
Moreover, newly introduced products such as derivatives and covered warrants show the creation of government agencies in developing markets.
As a fund manager who has participated in Vietnam stock market for many years, Dominic Scriven stated four proposals.
First, he proposed that the Ministry of Justice incorporated with SBV to provide guidelines, unified modification to the legal status of foreign organisations in the stock market to ensure finance operation for investors in Vietnam.
Secondly, in developed countries, institutional investors often occupy from 50 percent to 70 percent of the market, individuals make up the rest, but the situation in Vietnam is the opposite. The absence of investment organisations, financial institutions and professional investors creates many difficulties for businesses that need reliable, strong and responsible investors; making it difficult for individual investors in Vietnam as it is necessary to develop suitable, safe, long-term and professional products; making the market lose its diversity.
Dragon Capital Chair proposed the functioning authorites to solve the remaining problems, establish a voluntary pension fund and pave the way for other types of organisations to participate in the market, and diversify investment products.
Thirdly, Dominic Scriven said that foreign investors ownership rate was much concerned by investors and affected the upgrading of Vietnamese Stock. This was also an issue that accounted for 80 percent of the concerns of foreign investors and MSCI in considering the ability to upgrade.
The Chair of Dragon Capital proposed that the government should review Article 23 of the Investment Law due to the fact that Vietnamese enterprises with foreign ownership of more than 51 percent become foreign enterprises, which is not appropriate, creating an unfair competition.
Besides, he also proposed, while many banks are increasing capital mobilisation to meet basel II standards, the government might consider raising foreign ownership limit in banks from 30 to 49 percent. At the same time, Vietnam should also consider “give the green light” for non-voting depository receipt (NVDR) according to the model of Thailand or Malaysia.
Finally, the Head of Dragon Capital said that the current Vietnam stock market was suitable for the State to divest successfully, according to the method of making cashbook and divestments should be further promoted. At the same time, the State should consider accepting to sell more shares to create conditions for enterprises to reform their management system.
