Investors and securities professionals are calling on authorities to allow foreign investors to own 100 per cent stakes in listed companies, a rule long overdue for change that would likely have a strong impact on the capacity of the market to attract foreign capital.
Decree No 58, which took effect on September 15, allows foreign investors to own 100 per cent of the charter capital of operating securities companies or to set up a new 100-per-cent foreign-invested brokerage. However, foreign ownership in all listed enterprises (except securities firms) remains capped at 49 per cent under current regulations.
According to market insiders, the regulation lifting the cap on foreign ownership in securities companies cannot alone bring positive effects to the market since securities firms have lost their appeal in light of the prolonged market downturn.
They are urging the Government to lift the foreign ownership limit on all listed companies, noting that a number of companies were still capable of drawing foreign investor interest but the room for their investments has become almost exhausted.
The Law on Investment permits foreign investors to establish 100 per cent foreign-owned companies in many industries and the rules regulating foreign investments in the stock market should agree with that regulation, Alternative Investment Capital Group chairman Hoang D. Quan told the newspaper Dau tu Chung khoan (Securities Investment).
Limiting foreign ownership at 49 per cent of listed companies has created a legal discrepancy that negatively affects foreign views of the investment environment in Viet Nam, Hoang said.
"The biggest obstacle to foreign investment is the lack of transparency of listed companies," he added. "Thus, opening more room for foreign investors is just one way in which Viet Nam's stock market could improve."
A number of analysts, however, had voiced concerns that allowing foreign investors to buy 100 per cent of listed companies would enable foreigners to acquire listed companies at cheap prices.
But Saigon Securities Inc chairman Nguyen Duy Hung dismisses such concerns, saying that the bigger problem was that many companies wanted to sell shares but nobody wanted to buy them.
The State Securities Commission has been collecting comments from market participants as it develops guidelines for further regulations to govern foreign investment in the Vietnamese stock market.
Nguyen Son, head of the State Securities Commission's market development department, said increasing foreign ownership in listed companies wouldn't happen soon, since regulators also needed to consider other related issues.
A draft decision regulating foreign investment on the stock market, meanwhile, would allow foreign investors to own over 49 per cent of a listed company which operates in a specific industry in which the law already allows foreign ownership of over 49 per cent, Son said.
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