The Ho Chi Minh City Stock Exchange. (Photo: SGGP)
He said that the economic stimulus package to be implemented in 2022 would have a great impact on the economy and the development of businesses, thereby indirectly affecting the stock market in a more favorable direction. In terms of advantages, the economic stimulus package with the main focus of fiscal policy would have a direct impact on helping businesses restore production quickly, stimulate consumption demand, reduce costs through taxes and fees, contribute to making GDP grow again.
The stimulus package focuses on industries badly damaged by the pandemic and benefiting industries, such as aviation, tourism, fisheries, and textiles.
It is different from monetary policy, which usually affects the stock market and real estate market immediately. Therefore, investors will have positive expectations of the economic stimulus package. The general level of risk in the market will be minimized, then asset valuation will increase, which is one of the favorable factors for the growth of the stock market. The economic stimulus package helps to improve the performance of enterprises but cannot be assessed at the time of application, it takes at least one year - a business cycle. Along with that, Vietnam's stock market is now larger, with 1,700 stocks and market capitalization exceeding GDP, so the economic stimulus package cannot directly, immediately, and significantly affect the stock market.
Vietnam's securities industry has just celebrated 25 years of establishment and development. Compared to the long history of hundreds of years of the international stock market, Vietnam's securities industry is still relatively young. Therefore, strengthening cooperation and opening up for international integration is one of the mandatory requirements, helping the stock market to develop and affirm its position on the map of international and regional capital markets.
The Ministry of Finance has directed the State Securities Commission of Vietnam (SSC) to finalize and submit to the competent authorities a strategy to develop Vietnam's stock market by 2030. One of the important strategies is to proactively integrate with the global stock markets, to become one of the four major stock markets of the ASEAN region. The Ministry of Finance will focus on some solutions.
Firstly, the ministry will continue to open and integrate the stock market and link it with regional and world markets, following the international commitments, principles, standards, practices, and practical conditions of Vietnam.
Second, it will open and integrate the stock market towards building a green and sustainable stock market in line with the overall development strategy of the economy, proactively applying technological achievements of the fourth industrial revolution in the field of securities, aiming at building digital finance in the securities sector.
Third, it will approach basic international practices and standards in fundamental areas, such as transaction practices, management standards, and accounting and auditing.
Fourthly, it will perfect the system of management mechanisms and policies to attract and exploit foreign capital effectively in line with the development requirements of the country in each period.
Fifth, it will research and improve mechanisms and policies to support market linkage activities and technical infrastructure for trading, depository, clearing, and payment to promote integration, and link more deeply between Vietnam's stock market and international ones. They are also key criteria for the consideration of market upgrading by market rating agencies MSCI and FTSE.
Sixth, it will focus on effectively implementing signed international commitments, especially new-generation free trade agreements (FTAs).
The stimulus package focuses on industries badly damaged by the pandemic and benefiting industries, such as aviation, tourism, fisheries, and textiles.
It is different from monetary policy, which usually affects the stock market and real estate market immediately. Therefore, investors will have positive expectations of the economic stimulus package. The general level of risk in the market will be minimized, then asset valuation will increase, which is one of the favorable factors for the growth of the stock market. The economic stimulus package helps to improve the performance of enterprises but cannot be assessed at the time of application, it takes at least one year - a business cycle. Along with that, Vietnam's stock market is now larger, with 1,700 stocks and market capitalization exceeding GDP, so the economic stimulus package cannot directly, immediately, and significantly affect the stock market.
Vietnam's securities industry has just celebrated 25 years of establishment and development. Compared to the long history of hundreds of years of the international stock market, Vietnam's securities industry is still relatively young. Therefore, strengthening cooperation and opening up for international integration is one of the mandatory requirements, helping the stock market to develop and affirm its position on the map of international and regional capital markets.
The Ministry of Finance has directed the State Securities Commission of Vietnam (SSC) to finalize and submit to the competent authorities a strategy to develop Vietnam's stock market by 2030. One of the important strategies is to proactively integrate with the global stock markets, to become one of the four major stock markets of the ASEAN region. The Ministry of Finance will focus on some solutions.
Firstly, the ministry will continue to open and integrate the stock market and link it with regional and world markets, following the international commitments, principles, standards, practices, and practical conditions of Vietnam.
Second, it will open and integrate the stock market towards building a green and sustainable stock market in line with the overall development strategy of the economy, proactively applying technological achievements of the fourth industrial revolution in the field of securities, aiming at building digital finance in the securities sector.
Third, it will approach basic international practices and standards in fundamental areas, such as transaction practices, management standards, and accounting and auditing.
Fourthly, it will perfect the system of management mechanisms and policies to attract and exploit foreign capital effectively in line with the development requirements of the country in each period.
Fifth, it will research and improve mechanisms and policies to support market linkage activities and technical infrastructure for trading, depository, clearing, and payment to promote integration, and link more deeply between Vietnam's stock market and international ones. They are also key criteria for the consideration of market upgrading by market rating agencies MSCI and FTSE.
Sixth, it will focus on effectively implementing signed international commitments, especially new-generation free trade agreements (FTAs).
Deputy Finance Minister Nguyen Duc Chi. (Photo: SGGP)
Although Vietnam's economic outlook in 2022 is assessed to continue to recover, it still faces difficulties and challenges due to the complicated developments of the Covid-19 pandemic, global trade tensions, increasing trade protectionism, and financial risks that could be exasperated because of a prolonged pandemic. Amid that context, for the stock market to continue to develop, in 2022, the Ministry of Finance has set key targets, such as continuing to perfect the legal framework and policy system for market development in which focusing on completing the project of the stock market development strategy for the 2021-2030 period. At the same time, it will focus on putting new regulations and policies of the Securities Law and guiding documents into practice to support enterprises and protect the legitimate rights and interests of investors. In 2022, the market organization model and the clearing and payment model will be completed in the direction of efficiency, risk minimization, and compliance with international practices. The new trading system KRX will be put into operation soon, and the model of central clearing and payment will be deployed for the underlying stock market. Another key task is to strengthen inspection, supervision, strictly handle violations, continue to restructure the stock market, and strengthen the management of securities trading organizations. Besides, it should proactively integrate into the international financial market, improve competitiveness, and gradually narrow the development gap between Vietnam's stock market and markets in the region and the world, implement solutions to upgrade Vietnam’s stock market from Frontier Market to Emerging Market on MSCI and FTSE rankings soon.
Vietnam’s stock market was explosive in 2021
In 2021, despite continuously having to deal with the Covid-19 pandemic, Vietnam's stock market made a strong breakthrough, continuously setting new records in terms of the index, the trading value, and the number of newly-opened securities accounts of domestic investors.
The number of newly-opened accounts in 2021 exceeded 1.3 million accounts, bringing the total number of securities accounts in Vietnam to 4.08 million, an increase of 47.3 percent compared to the end of 2020. This result shows that stock is an investment channel that attracts the attention of many investors, especially individual domestic investors.
The growth of the stock market is supported by many factors. The short-term expectation of the stock market in 2021 was different from 2020. Although the pandemic broke more strongly, the growth forecast of countries around the world remained high, thanks to confidence in vaccines and the ability to control the pandemic of countries. Besides, the recovery of economic locomotives, such as Europe, the US, and China, and major partners of Vietnam. The Government's macro-management policies with timely economic support solutions have had a positive impact on the stock market, along with the increase in vaccine coverage, the ability to adapt to the pandemic when reopening, and the recovery of production activities of enterprises. In addition, there was a shift in capital flows from traditional investment channels to securities. The reason that other investment channels became less attractive was due to the impact of the Covid-19 pandemic.
The management and administration, legal development, and restructuring of the stock market over the past time have also contributed positively to the strong development of the stock market. Specifically, the Government and the Ministry of Finance have promptly and synchronously deployed a system of legal documents regulating the operation of the stock market. The system of trading, clearing, and payment on the stock market has been systematized again, allowing to shorten the processing time, improving payment and policies on the exemption, and reduction of fees, charges, and services on the stock market to support the market and remove difficulties for businesses.
In 2021, despite continuously having to deal with the Covid-19 pandemic, Vietnam's stock market made a strong breakthrough, continuously setting new records in terms of the index, the trading value, and the number of newly-opened securities accounts of domestic investors.
The number of newly-opened accounts in 2021 exceeded 1.3 million accounts, bringing the total number of securities accounts in Vietnam to 4.08 million, an increase of 47.3 percent compared to the end of 2020. This result shows that stock is an investment channel that attracts the attention of many investors, especially individual domestic investors.
The growth of the stock market is supported by many factors. The short-term expectation of the stock market in 2021 was different from 2020. Although the pandemic broke more strongly, the growth forecast of countries around the world remained high, thanks to confidence in vaccines and the ability to control the pandemic of countries. Besides, the recovery of economic locomotives, such as Europe, the US, and China, and major partners of Vietnam. The Government's macro-management policies with timely economic support solutions have had a positive impact on the stock market, along with the increase in vaccine coverage, the ability to adapt to the pandemic when reopening, and the recovery of production activities of enterprises. In addition, there was a shift in capital flows from traditional investment channels to securities. The reason that other investment channels became less attractive was due to the impact of the Covid-19 pandemic.
The management and administration, legal development, and restructuring of the stock market over the past time have also contributed positively to the strong development of the stock market. Specifically, the Government and the Ministry of Finance have promptly and synchronously deployed a system of legal documents regulating the operation of the stock market. The system of trading, clearing, and payment on the stock market has been systematized again, allowing to shorten the processing time, improving payment and policies on the exemption, and reduction of fees, charges, and services on the stock market to support the market and remove difficulties for businesses.
