The post-merger exchange should operate as a parent company and the two bourses in HCM City and Hanoi still continue to operate independently, Trang Hoang Ngan, Director of the Ho Chi Minh City Cadre Institute, told the 14th National Assembly’s eighth meeting on October 22 in Hanoi. (Photo: cafef.vn)

Tran Hoang Ngan, Director of the Ho Chi Minh City Cadre Institute, a member ofthe National Assembly's (NA) Economic Committee and member of the PrimeMinister's economic advisory group, made the statement at the 14th NationalAssembly’s eighth meeting on October 22 in Hanoi.

Vietnam’s stock market capitalisation has reached 5.6 quadrillion VND (239billion USD), equivalent to over 100 percent of the country’s gross domesticproduct (GDP) in 2018, of which the capitalisation of the Hồ Chí Minh StockExchange contributes over 85 percent, Ngan told the meeting.

“The stock market now has about 2.3 million investor accounts, of which foreigninvestors only have 30,000, but they are holding about 25 per cent of thecapitalisation value. This means we must be more cautious in organising thestock market,” Ngan said.

"Therefore, I propose that the Vietnam Stock Exchange operate under themodel of a one-member limited liability company whose 100 percent of capital isowned by the State,” he said.

Ngan’s idea builds on the regulations about the post-merger exchange currentlystated in the revised draft Law on Securities, which says that the Stateholding in the combined exchange will be over 50 percent.

Under the draft law, the two national stock exchanges will be merged into onesingle stock exchange, headquartered in the capital.

But Ngan is opposed to the plan and said this model would constrain thedevelopment of the stock market.

The post-merger exchange should operate as a parent company and the two boursesin HCM City and Hanoi still continue to operate independently, Ngan said.

Under the draft law, the post-merger stock exchange will be managed by theMinistry of Finance, acting as a focal point for issuing regulations on stocklistings and trading, monitoring the stock market, managing risk and directlyorganising securities transactions.

Minister of Finance Dinh Tien Dung said that his ministry’s Drafting Board willreceive and carefully research Ngan’s ideas.

Dung said the stock exchange merger plan will be executed from now till 2023.

The combined exchange will be equitised, but not in the next five years./.VNA