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Open funds have officially been opened, new investment wave expected
The circular that guides the establishment and management over open investment funds has been issued, which is hoped to create a “set of new investment tools”. Especially, close funds are allowed to shift into open funds, which will help ease the pressure on the market when the funds are due for dissolution.
The circular has been posted on the official website of the State Securities Commission SSC, while the stock market has not received the official legal document.
Nguyen Doan Hung, Deputy Chair of SSC, said that the 200-page circular is the most “grandiose” ever legal document issued so far which lays the foundation for the establishment of a series of new investment products to be designed by institutions.
Hung said that SSC is checking the legal document once more before it is officially published in some days. In general, the circular will take valid after 45 days since the day of its official publishing.
The promulgation of a legal framework for open investment funds has been prepared for the last year, which is a move that goes in accordance with the development of the stock market. In most of the stock markets in the world, close funds only exist in the first period of the financial markets. Meanwhile, 98 percent of the investment funds are now open ones.
The government of Vietnam is now instructing to restructure the stock market. There are three works that need to be done. First, upgrading the quality of “commodities” in the market. Second, restructuring intermediary institutions, such as securities companies and fund management companies. Third, re-organizing stock exchanges and depository centers.
The plan to restructure the stock market has been submitted by the State Securities Commission to the government. The promulgation of the circular that guides the establishment and management over open funds is a part of the plan.
Answering the question of Thoi bao Kinh te Vietnam in a recent interview, Hung denied the fact that the figure of 25 trillion dong worth of investment capital in close funds which may withdraw from Vietnam when the funds get matured, is the pressure that has forced SSC to issue the legal document.
Hung said that the figure of 25 trillion dong is groundless. However, he said that the establishment of open funds would partially help ease the pressure on the close funds which have the demand for finalization. The legal framework allows close funds to turn into open funds before the maturity. This will help ease the pressure to be raised when funds are dissolved and help retain the capital flow into the market. Most foreign investors wish to have open funds because they can create more channels to attract capital.
The funds’ investors’ meeting has the right make decision on shifting close funds into open funds before the maturity.
SSC hopes that the new circular would help create more useful tools for the investors to use, which will help attract them more to the stock market.
Open funds are the basic foundation for financial institutions to create different investment tools to attract investors. Different types of investment funds would be born on the basis of open funds, such as voluntary pension funds, additional pension funds, ETF, associated insurance products, bond investment funds and even monetary funds.
The market will decide what products to be created, while management agencies can only set up a legal framework to facilitate the operation of the market. Investment institutions would design reasonable products.
Hung has revealed that when consulting with well known finance institutions during the circular compilation, such as HSBC, Standard Chartered, Prudential and Manulife, they institutions have said they have got ready to set up open funds. Domestic institutions such as VFM, Bao Viet, SSI and VCB are also considering the issue.
“I strongly believe that we will see a new wave on the finance market after the circular is issued,” Hung said.
vietnamnet
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