New opportunities and challenges from lifted foreign ownership limits

Experts in the stock market say that Decree 60, which instructs the implementation of the Law on Securities, has created hope for a new boost in foreign investments in the stock exchange.

Instead of the old foreign ownership limit of 49% in local listed enterprises, foreign investors can now possess 100% of company stakes in most sectors, except for banking, national defence, and insurance. This new regulation has made Vietnam’s stock exchange more attractive.

Making more room for foreign ownership is beneficial to foreign investors. For enterprises that operate with foreign ownership, their stock prices will increase and they will have the chance to appeal for more capital.

The current size of Vietnam’s stock exchange is about 57 billion USD. Of which, 12 billion USD is foreign capital. These figures are still considered small-scale, compared with stock exchanges in the rest of the world. The abolition of the foreign ownership limit is expected to boost the flow of foreign investments in Vietnam. However, it is predicted that foreign investors will be selective.

Decree 60 will not take effect until September 1^st. Experts also note that more specific instructions and regulations from authorities are required to make a boost in foreign investments occur.