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Vietnam has three major stock exchanges: the Ho Chi Minh City Stock Exchange (HoSE), the Hanoi Stock Exchange (HNX), and the Unlisted Public Companies Market (UPCoM). Of those, the HoSE–as the main equities market–is the biggest and most well-known.

This article will deal with the technical aspects of investing in Vietnam’s stock markets. For a broader overview of trading stocks in Vietnam see: The Vietnam Stock Exchange: Quick Guide 2024.

Getting started trading stocks in Vietnam

To invest in Vietnam stock markets non-Vietnamese will need to complete a number of additional steps over and above what a local will need to do. This is not necessarily a complicated process, however, it can be tedious. 

Open a cash account at a Vietnamese bank

An Indirect Investment Capital Account, more commonly referred to as an IICA, is required by law for all foreign investors in Vietnam. This is essentially a Vietnamese dong cash account.

Though actual requirements may differ from bank to bank this will generally require:

• General personal information including full name, date of birth, nationality, etcetera;
• A copy of the applicant’s passport;
• A copy of an entry visa; and
• A copy of a work permit.

Note that banks in Vietnam tend to each have their own rules and regulations around opening accounts for non-Vietnamese. That said, the procedure is typically most straightforward when dealing with foreign banks in Vietnam rather than local banks.

Apply for a Securities Trading Code

A Securities Trading Code is used to monitor foreign investment in Vietnamese stocks to ensure foreign ownership does not go over foreign ownership limits.

To apply for a Securities Trading Code in Vietnam, investors will need::

• To complete a Securities Trading Code application form;
• A signed letter authorising a Vietnam Vietnam Securities Depository member to apply for the Securities Trading Code on the investor’s behalf; and
• Two notarised copies of the investor’s passport.

Open a securities account at a Vietnamese brokerage

Foreign investors will also need to open a brokerage account with a Vietnam-based brokerage. There are a number of brokerages spread out around Vietnam, however, most are based in either Hanoi or Ho Chi Minh City.

Though actual requirements may differ from brokerage to brokerage this will generally require:

• An application form;
• An original copy of the applicant’s Securities Trading Code; and
• A copy of the applicant’s passport.

Trading rules and regulations

For all three of Vietnam’s stock exchanges, there are slightly different rules and regulations. That said, the key rules foreign investors should be aware of are all basically the same.

Price limits

On all three stock exchanges, there are limits as to how much value a stock can gain or lose in one day. For the HoSE it is 7 percent, for the HNX it is 10 percent, and for UPCoM it is 15 percent. These limits are based on the reference price which is a stock’s closing price at the end of the previous day.

Foreign ownership limits

Regulations on foreign ownership limits in securities are outlined in Section 6 of Decree 155/2020/ND-CP. These regulations dictate that caps on investing in publicly listed companies are determined by international treaties first and then local laws and regulations. On the latter, these are often set by different ministries for different industries. For example, foreign ownership limits in aviation are set by the Ministry of Transport whereas in banking they are set by the Ministry of Finance. The criteria by which they are determined are not particularly transparent; neither are these determinations necessarily consistent.

Of note, as of March 11, of 401 stocks listed on the HoSE, 371 stocks had foreign ownership limits. For 366 of those stocks, foreign ownership was capped at 50 percent or less. For some context, the Korea Stock Exchange, which is around the most advanced of the emerging markets, had only 32 stocks in which foreign investment was limited as of March 2024 out of a total of 928. 

Pre-funding requirements

Investors in Vietnam’s stock exchanges are required to have proof of funds in their account before a trade is executed. This is as opposed to having several days to provide funds and for the trade to be settled as is the case on more developed stock exchanges. Of note, this may change soon with these pre-funding requirements a key sticking point holding the Ho Chi Minh City Stock Exchange back from an upgrade to a secondary emerging market by FTSE Russel.

For more information see: Vietnam’s Stock Market Upgrade Opportunity: Unpacked

Vietnam stock market trading hours

Whereas more developed stock exchanges tend to trade from 10 am to 4 pm. Vietnam’s major exchanges are slightly different. Trading on both exchanges is limited to about four hours and divided into two sessions.

HoSE

The HoSE is open Monday through Friday from 8:00 am to 11:30 am and from 1:00 pm to 5:00 pm. Trading, however, is only conducted in the morning between 9:15 am and 11:30 am, and in the afternoon between 1:00 pm and  2:30 pm local time. 

HNX

The HNX is open Monday through Friday from 8:00 am to 5:00 pm, with trading conducted from 9:00 am to 11:30 am and 1:00 pm to 2:30 pm local time.

Key indexes

VN-Index

The VN-Index contains all of the stocks listed on the HoSE. These are weighted based on their market capitalisation and provide a broad overview of the stock market. This index is the most well-known and the most widely reported in the media.

MSCI Vietnam Index

The MSCI Vietnam Index includes 56 stocks that cover about 85 percent of the value of the HoSE. As of January 2024, the Vietnam Index was divided by real estate at 27.9 percent, financials at 25.33 percent, consumer staples at 16.28 percent, materials at 14.86 percent, and industrials at 9.23 percent.

FTSE Vietnam All-Share Index

The FTSE Vietnam All-Share Index is a broad index of the Ho Chi Minh City Stock Exchange. The top 10 stocks included in the index, as of January 2024, made up 50.19 percent of the index. These stocks covered industrials, telecommunications, real estate, food, banks, and retail. In total, there were 57 stocks included in the index with a collective market capitalisation of about US$39.2 billion.

For more information see: Vietnam Stock Market Indexes: Quick Guide 2024

What’s next?

As an emerging economy and a frontier market, investing in stocks in Vietnam can be an exciting and rewarding experience. Getting started investing in Vietnam stock markets, however, can be a time-consuming and tedious process. That said, there are a number of brokers and finance experts in Vietnam that can assist foreign investors in opening a trading account in Vietnam. For support let us connect you with an expert.

Also as a dynamic marketplace, developments often come thick and fast, and in this respect, foreign investors interested in investing in Vietnam’s stock markets should make sure to subscribe to the-shiv.