Vietnam has been a target for many frontier market investors for a long time, especially as a proxy for an early development China. Both the equity and currency market have been very volatile, but Vietnam has been one of the best performing equity markets across the world this year.
Vietnam has also moved towards opening up its stock market and making them more foreigner friendly. The Ho Chi Minh Stock Exchange has planned to scrap foreign holding restrictions by the end of this year. The government is also in the midst of privatizing many state owned enterprises. English on brokerage and official government websites is available, but remains poor with a lot of Vietnamese only information making it hard for foreign investors to get information. However, it is a big step-up from even 5 years ago, so we took a look at how to invest in Vietnam’s stock market.
Vietnam has two main stock exchanges: the Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HSX).
Ho Chi Minh Stock Exchange (HOSE)
- Largest stock exchange in Vietnam, and the main target for foreign investors
- Established in 2000
- Market capitalization of 1,183,525 bio VND (just under $56 bio USD) as of 17 July 2015
- Total listed stocks: 305 (as of 17 July 2015)
- Average monthly turnover, first 6 months of 2015: 34,660 bio VND (around $1.63bio USD) a month
- Trading hours: 09:00 to 15:00 with a break from 11:30 to 13:00
Hanoi Stock Exchange (HSX)
- Secondary stock exchange in Vietnam
- Established in 2005
- Market Capitalization of 145,366 bio VND (just under $7 bio USD) as of 17 July 2015
- Total listed stocks: 361 (as of 17 July 2015)
- Average monthly turnover, first 6 months of 2015: 11,520 bio VND (around $0.543 bio USD) a month
- Trading hours: 09:00 to 15:00 with a break from 11:30 to 13:00 (same as HOSE)
There is also an Unlisted Public Company Market (UPCoM) operated by the Hanoi Stock Exchange, which trades unlisted stocks and convertible bonds not listed on the two other exchanges.
How to Invest in Vietnam’s Stock Market
Foreigners are allowed to invest in both HOSE and HSX, although there remain more restrictions with HSX in terms of majority holdings. This should not come into play for retail investors though.
1. Find a Vietnamese Stock Brokerage Firm
Finding a brokerage firm is essential in order to navigate the forms and documents required to begin investing in Vietnam’s stock markets. With language barriers a big issue, it is usually safest to go with one of the bigger firms in Vietnam. This is a list of brokerage firms by market share on the Ho Chi Minh Stock Exchange, for all of 2014:
|Code||Member||Mkt Share (%)|
|SSI||Saigon Securities Incorporation||12.53|
|HSC||Hochiminh City Securities Corporation||11.74|
|VCSC||Viet Capital Securities Joint Stock Company||6.52|
|VNDS||Vndirect Securities Corporation||5.81|
|ACBS||ACB Securities Company Ltd.||5.6|
|MBS||MB Securities Joint Stock Company||4.55|
|FPTS||FPT Securities Joint Stock Company||4.19|
|BVSC||Baoviet Securities Joint Stock Company||3.87|
|MBKE||MayBank Kim Eng Securities Limited||3.75|
|VCBS||Vietcombank Securities Company Ltd.||3.57|
We recommend inquiring with one of the top 5 brokerage firms and going with the most responsive and English friendly out of those. From our personal look at those sites, Hochiminh City Securities and ACB Securities had the easiest to use websites, although Saigon Securities has been cited as foreigner friendly due to its size.
2. Open a Securities Brokerage Account
Once you have selected a brokerage firm, they will request a number of documents to be filled out:
- Brokerage account opening form
- Power of attorney
- Application for Securities Trading Code (tied to step 4)
- Copy of passport
- Other supporting documents
- For US Citizens, additional forms to comply with US Tax law and FATCA compliance purposes will be required
With this information they can open a stock brokerage account with their firm.
3. Open a Bank Account
The brokerage firm will also assist in opening a bank account to hold funds for settling transactions. Different brokerage firms will use different banks (eg. HSC uses BIDV Bank while ACBS uses their own ACB Bank). This will require filling out another form to open this bank account, but they can use supporting documents from Step 2.
4. Apply for a Securities Trading Code
With everything else completed, the brokerage will then apply to the Securities Depository Center for your authorized Securities Trading Code, basically an investor ID for Vietnam. This will require a notarized passport copy as well but you will have submitted this in Step 2.
5. Begin Trading
After completing these steps, just transfer funds to your account to begin trading. Good luck!