If listed companies improve corporate governance and risk management, foreign investors will be deeply interested, a State Securities Commission official has said.

Nguyen Son, head of the securities watchdog's Market Development Department, was speaking to executives from stock brokerages, fund managers, and listed firms on measures to improve liquidity in the stock markets at a forum held by the Ho Chi Minh Stock Exchange on June 6.

He also said equitisation of State-owned enterprises should be sped up with their initial public offerings accompanied by listing on the stock market.

The SSC and the State Bank of Vietnam would assess the status of joint stock banks to make plans for their listing, he said.

Basic derivatives would be available before the end of next year, he revealed, with a legal framework expected to be created for the purpose.

The Government is expected to reduce its stakes to increase the free float of shares.

State ownership remains high in many companies - around 77 percent in Vietcombank and 46 percent in Vinamilk. This and the stakes held by strategic foreign partners mean there is little free float left.

"The State should hold stakes [only] in key industries, especially in which the private sector cannot invest in, and disinvest from good companies," Son said.

Selling its stakes in small and not-so-good firms is meaningless, he said.

He said a proposal to increase the foreign ownership in listed firms (49 percent; 30 percent in banks) has been drawn up and is awaiting the Government's approval. But he did not say the proposed new limits are.

Meanwhile LeHai Tra, Deputy General Director of HOSE, said liquidity is a reflection of investors' confidence.

"Therefore, enterprises' transparency and publicity have a significant impact on liquidity," he said.

HOSE Chairman Tran Dac Sinh said in the first five months of this year daily turnover was around 2.2 trillion VND (104 million USD), 93 percent higher than in the same period of 2013. But it has fallen to 800–900 billion VND, he said.

Nguyen Viet Ha, head of HOSE's Market Research and Development, said most of the listed firms have small market caps and this is not very attractive to foreign investors.

Of the over 300 companies listed in HCM City, only 10 have a market cap of more than 1 billion USD. Six each are worth 500 million USD-1 billion USD and 250-500 million USD.

Almost 230 are capitalised at less than 50 million USD.

Only 16 companies have a free float rate of more than 80 percent while 76 others have between 50 and 80 percent.-VNA