Nguyen Duy Hung, CEO of SSI Securities Corporation, said that the securities market should be the most important fund-raising passage for local companies.
However, still weighing on the confidence of both domestic and foreign investors in local firms were the transparency and quality of information disclosure, which had not been ensured, Hung told a recent meeting held by the State Securities Commission.

“We need to build the securities market and turn it into a channel, helping local firms attract capital investment. But key issues are market transparency and confidence,” he said.

According to Hung, the total amount of equity capital among local firms is still small with most coming from State-owned enterprises when the Government sold its stakes to outside investors, then from private-equity firms such as Vingroup, Masan and Hoang Anh Gia Lai. The total amount of corporate bonds, which is estimated at 100 trillion VND, comes from those private-equity firms and bondholders which are mostly commercial banks.

It was necessary to help the securities market beat commercial banks to become the first capital resource for Vietnamese firms, he said, adding local companies had not seen investors as partners but only as “cash machines” for their business activities.
To improve transparency and help investors avoid potential risks, intermediary financial firms should be empowered to develop market indices as they were the ones that closely worked with the market and investors, he added.

In addition, local firms must be audited by independent auditing firms such as the “Big Four” auditing firms – KPMG, Deloitte, Earnst & Young, and PwC – to raise their quality and accuracy of information disclosure, Hung said.

“Such actions will help gain investors’ confidence and assist government agencies to monitor the market more closely, fairly and transparently, thus making market trading less risky for inexperienced investors.”

According to Ha Thi Thu Thanh, Deloitte Vietnam CEO, the transparency of a business is often reflected by its financial report. “However, financial reports released by local firms often lack necessary information.”

“Financial reports and statements must be audited so that investors and market regulators can see a clearer picture on how the business is operating,” she said.
Financial audits must be done regardless of firms’ status (whether they are listed, unlisted or done with IPO) to make sure they were transparent to investors, she added.

In addition, she urged market regulators to make the securities law corresponding to the independent audit law so that local firms, especially listed ones, would be able to use international financial standards to look for external financial resources. A corporate governance scorecard may also be a way to keep local firms transparent, Thanh said.

The scorecard would make the boards of managers and directors work more closely to each other, improve their independence against each other, and so, raise the internal strength of the business, she said.-VNA