HANOI (Bloomberg): Vietnam is rolling out a series of regulatory reforms aimed at attracting more overseas investors into its stock market, which has outperformed regional peers this year.
A newly-issued decree eliminates the ability of public companies to unilaterally impose foreign ownership limits that are lower than those allowed by domestic law or international agreements, according to a statement on the government’s website.
The statement was posted late on Friday and took effect on Thursday, and is likely to reduce inconsistencies and improve transparency for foreign investors.
Vietnam currently allows foreign ownership of up to 100% of a firm in some sectors, with limits varying by industry and company type.
However, the previous system also allowed companies to set their own caps, and this loophole was often used to restrict or block foreign ownership. The new reforms aim to remove such barriers and make the market more accessible to international investors.
The regulation also streamlined the initial public offering and listing process with companies now required to list their shares within 30 days of receiving exchange approval, down from the previous 90-day window.
This change could shorten the overall IPO timeline by three to six months, making IPOs more attractive to investors and better protecting their interests, according to the statement.
The decree is "highly positive step that will align Vietnam’s market standards more closely with regional peers, draw greater foreign interest over time, and support broader upgrade,” according to Tyler Manh Dung Nguyen, chief market strategist at Ho Chi Minh City Securities.
Vietnam has taken a series of steps to boost the attractiveness of its equities to global funds in recent years, including seeking to be classified as an ‘emerging market’ by the FTSE Russell indexes. In November, authorities removed a requirement for overseas investors to fully prefund equity trades, eliminating a long-standing barrier to its potential upgrade from ‘frontier’ status.
Vietnam’s benchmark VN Index has risen more than 31% this year, outpacing Southeast Asian peers on optimism over economic growth and the potential upgrade of its market classification, which would likely spark foreign capital inflows.
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