Vietnam’s Stock Market GuideVietnams` stock market is attracting foreign funds in recent times. Vietnam`s growth story is somewhat similar to china, as the country was emerging in the 1980s and 1990s. Vietnam capital and currency market outperformed other Southeast Asian markets like; Thailand and Hong Kong but witnessed the turmoil of sharp up and downswings. The red tape and infamous heavy bureaucracy is the highest barrier for foreign investment. Lack of transparency about the market mechanism is another factor that is holding back foreign investors. Steps are taken to streamline the process like simplified regulations and friendlier bank policy.

HOSE /HSX

Ho Chi Minh City Stock Exchange is the largest stock exchange in Vietnam and is situated in Ho Chi Minh City. The stock exchange was opened in the year 2000 and is supervised by the State Security Commission. HOSE joined the United Nations Sustainable Stock Exchanges (SSE) in 2015, 18th May. At the initial level, foreign investment was capped to 20% on equities and 40% on bond. But to increase liquidity, the government increased the limit of foreign ownership to 30% on equities and removed the upper limit on selected bonds in 2015. As of 28th April 2017 number of listed companies at HOSE was 325, and on HNX was382, with a market capitalization of USD 84,134 million.

This step of scraping of limit on foreign investment has a hugely improved equity market in Vietnam. Buying stock is the only viable option for foreign investors as you cannot buy real estate assets in Vietnam. The total number of listed companies in two premium equity exchanges HOSE and HSX are around 700, which gives you an ample choice to buy equities.

Process of buying equity in Vietnam

You need to apply to Vietnam Securities Depository (VSD) for security trading code applicable to the foreign investor. To process the application, they generally take three working days. The next step is opening a trading account with a brokerage firm. You need to provide the relevant information to fill-up the form and needs to get approved, which also needs three working days. If you are a non-resident foreign investor, you need to open an indirect investment capital account in Vietnamese dong. Any direct or indirect transaction by a foreigner must be routed through a licensed bank. Licensed banks are those who have a legitimate license to trade or deal in foreign currencies. All foreign currencies are converted into Vietnamese dong (VND) before investing in the equity market. After registration processes are completed, a username and password will be sent in your registered email.

Forex trading in Vietnam is illegal, as it was banned by the State Bank of Vietnam in 2014. According to current regulation, no forex trader is registered in Vietnam, but you can trade with international forex brokers. Though it is banned, you can avail of services offshore brokers that are completely legal and safe. It was declared illegitimate to control the exchange rate of Vietnamese dong. The currency was drastically affected by inflation, and as forex trading influence the value of the currency it was prohibited. But as a relief measure, the State Bank of Vietnam (SBV) did not ban forex trading with highly regarded offshore forex brokers.

Sci-Tech