The securities market in HCM City has seen positive changes sincethe issuance of Government Decree 60/2015 which would permit a higherrate of foreign ownership in domestic public companies.
Thedecree amends and supplements several articles of Decree 58, providingdetails and implementing guidelines on several articles of the Law onSecurities and Amended Laws on Securities.
The new decree, due to take effect on September 1, will remove limits on foreign ownership in listed companies.
Current regulations cap foreign stakes in public companies at 49 percent.
Underthe new decree, a foreign stake can be lifted to 100 percent for mostsectors, and firms will also be allowed to propose their own limits.
However, the limit on foreign stakes at banks will be retained at the existing level of 30 percent.
LeNhi Nang, Head of the State Securities Commission in HCM City, said theincrease in foreign ownership ratio in the securities market wouldbenefit both foreign investors and the listed firms.
Inparticular, the former would have more opportunities to participate inmanaging the listed Vietnamese companies, while the latter would bemanaged more effectively and transparently, thus enabling them toattract more overseas capital, Nang said.
The domestic stockexchange would also be able to attract more foreign capital to improveits liquidity, helping it become a member of newly emerging marketgroups.
The change in the foreign-ownership rate would alsopermit sustainability of funds so domestic firms would no longer have todepend on credit from commercial banks.
Nguyen Thanh Long, ViceChairman of the State Securities Commission (SSC) said that theobjective of Decree 60 was to help struggling enterprises seek newsources of capital and improve restructuring plans.
The newdecree is consistent with Vietnam's commitments to the World TradeOrganisation (WTO), which allows for more foreign indirect investment inthe securities market.
According to market analysts, dozens oflisted companies in domestic bourses had run out of room for foreigninvestors, so changes in Decree 60 will allow those foreigners to becomestrategic shareholders.
The local market has in recent daysregistered a significant increase in points although the new decree hasyet to come into effect.
On July 7, for instance, the VN-Indexincreased 10 points to close at 330.27 points. The market also received anew flow of capital from overseas investors.
Analysts, however,said that while changes in the new decree were welcomed by foreigninvestors, many domestic investors were concerned because theirownership ratio would likely drop due to the higher stakes of foreigninvestors.
Huynh Anh Tuan, Director of the SJC SecuritiesCompany, said that 80 percent of domestic investors in the securitiesmarket were still small, so they would not be able to compete with majorinvestors, particularly foreigners.
Nang, Head of the StateSecurities Commission in HCM City, said he was concerned about thepossibility that listed domestic companies would likely be usurped byforeign investors who could buy domestic companies' stakes without anylimits.
He said Vietnamese firms should conduct careful studiesof foreign partners to ensure that they would closely cooperate withthem in implementing long-term strategies for the sake of the company'sdevelopment, and for the interests of the two sides and theshareholders.-VNA
Thedecree amends and supplements several articles of Decree 58, providingdetails and implementing guidelines on several articles of the Law onSecurities and Amended Laws on Securities.
The new decree, due to take effect on September 1, will remove limits on foreign ownership in listed companies.
Current regulations cap foreign stakes in public companies at 49 percent.
Underthe new decree, a foreign stake can be lifted to 100 percent for mostsectors, and firms will also be allowed to propose their own limits.
However, the limit on foreign stakes at banks will be retained at the existing level of 30 percent.
LeNhi Nang, Head of the State Securities Commission in HCM City, said theincrease in foreign ownership ratio in the securities market wouldbenefit both foreign investors and the listed firms.
Inparticular, the former would have more opportunities to participate inmanaging the listed Vietnamese companies, while the latter would bemanaged more effectively and transparently, thus enabling them toattract more overseas capital, Nang said.
The domestic stockexchange would also be able to attract more foreign capital to improveits liquidity, helping it become a member of newly emerging marketgroups.
The change in the foreign-ownership rate would alsopermit sustainability of funds so domestic firms would no longer have todepend on credit from commercial banks.
Nguyen Thanh Long, ViceChairman of the State Securities Commission (SSC) said that theobjective of Decree 60 was to help struggling enterprises seek newsources of capital and improve restructuring plans.
The newdecree is consistent with Vietnam's commitments to the World TradeOrganisation (WTO), which allows for more foreign indirect investment inthe securities market.
According to market analysts, dozens oflisted companies in domestic bourses had run out of room for foreigninvestors, so changes in Decree 60 will allow those foreigners to becomestrategic shareholders.
The local market has in recent daysregistered a significant increase in points although the new decree hasyet to come into effect.
On July 7, for instance, the VN-Indexincreased 10 points to close at 330.27 points. The market also received anew flow of capital from overseas investors.
Analysts, however,said that while changes in the new decree were welcomed by foreigninvestors, many domestic investors were concerned because theirownership ratio would likely drop due to the higher stakes of foreigninvestors.
Huynh Anh Tuan, Director of the SJC SecuritiesCompany, said that 80 percent of domestic investors in the securitiesmarket were still small, so they would not be able to compete with majorinvestors, particularly foreigners.
Nang, Head of the StateSecurities Commission in HCM City, said he was concerned about thepossibility that listed domestic companies would likely be usurped byforeign investors who could buy domestic companies' stakes without anylimits.
He said Vietnamese firms should conduct careful studiesof foreign partners to ensure that they would closely cooperate withthem in implementing long-term strategies for the sake of the company'sdevelopment, and for the interests of the two sides and theshareholders.-VNA
