Even as the Vietnamese stock market is known to yield rock-solid returns, it is still believed to be a golden minefield for anyone who has the most crucial financial knowledge of this murky world of investments.
Besides, as a greenhorn, you can get tripped while attempting to keep tabs with the trends or blind yourself to the truths of the market. It is essential to come up with a long-term strategy and find some time to equip yourself with some industry practices.
Vietnam continues to hit the airwaves with its high-flying stock market that is among Asia’s leading exchanges, tripling competitors, such as Thailand and Hong Kong. Vietnam is further attracting many foreigners and expats with its abridged regulations and welcoming banks. Moreover, the recent improvements in Vietnam’s equity markets have also given foreigners a thousand reasons to invest in Vietnam to the tunes of 700 different stocks.
Exclusive interview with a Vietnamese stock trader
In this interview, Guillaume from Movetoasia is inviting a part-time trader to cover all the questions foreigners and investors may have about the Vietnam stock market. If you are considering investing in Vietnam, this video will illustrate some of the common questions we have when we consider investing in Vietnam.
Here are some of the topics we discuss in this interview :
- Different channels to invest in Vietnam
- Risks to consider before investing in the stock market
- ETFs vs. buying stocks: advantages and disadvantages
- How to get started in the Vietnamese stock market
Exchanges in Vietnam to look into
To help you get off to a good start by showing you the two most sought-after stock exchanges in Vietnam and the best advice on how to start investing in Vietnam stock exchange.
Hanoi Stock Exchange (HSX)
HXS is a stock exchange located in Hanoi, Vietnam. It was first started in 205 and has since been managing auctions as well as trading, bonds, and stocks.
Ho Chi Minh Stock Exchange (HOSE)
This is arguably the largest stock exchange in Ho Chi Minh City, Vietnam. It was founded in the year 2000, and it was named Ho Chi Minh City Securities Trading Center (HoSTC). Later on in the year 2015, HOSE merged with the United Nation’s Sustainable Stock Exchanges (SSE) program, further making it one of the most trusted and revered stock exchanges.
How to Invest in the Vietnam Stock Exchange
As a foreigner, you can invest in the Vietnam stock exchange by using the two stock exchanges: HSX and HOSE. While HSX is known to have a couple of limitations for you, when it comes to majority holdings, this should not bar you from trying out your luck in Vietnam’s stock exchange.
But the question is how to invest or start investing in the first place. These are some of the crucial steps of starting:
Look for a Stock Brokerage Firm in Vietnam
As a foreigner, you have the opportunity of hiring a stock brokerage firm to help you start investing in Vietnam’s stocks. With the challenges relating to language barriers, it is usually advisable to open an account with one of the reputable brokerage firms in Vietnam, bypass the limitations and start your way of investing.
Create a Stock Brokerage Account in Vietnam
This is a stage that comes immediately after you have already selected the most preferred brokerage firms to work with, in your stock investment endeavors. At this point, you will be required to provide some documents that must be filled out. The documents may vary from one Brokerage Company to another, but the following are the common types of documents needed:
- Copy of passport;
- Account Opening Application;
- FATCA Compliance Document (US Citizens);
- Power of Attorney (POA);
- Securities Trading Code Application.
Open a Bank Account in Vietnam
At this stage, you need to open a bank account in Vietnam. Typically, your chosen stockbroker should assist you in opening a bank account in Vietnam. They should make an effort to open your bank account with their financial partners, which will help them to hold funds and cover international transactions when required.
For you to open a bank account in Vietnam, you will be required to fill in a couple of forms. However, your brokerage company can make it easier for you by picking your details from similar documents that you filled in previously when joining your brokerage firm.
Apply for a Securities Trading Code
After completing all the requirements set out in all the stages, your brokerage firm will take over. They will assist you in applying our securities trading code. This code is usually an ID that is created for foreign investors. It is also mandatory for trading stocks in Vietnam.
As part of this application process, you will still be required to provide a notarized passport copy. However, this should not be needful if you already provided it in the last two stages.
Upon receiving your securities trading code, you will be good to go. You only need to transfer funds to your new brokerage firm and start your journey of investing in Vietnam stocks.
Risks of Investing in the Vietnamese Stock Market
Even if Vietnam is a promising market, it is also obviously very impacted by some world crisis like the current crash we are having right now related to Covid-19. So be aware of investing only savings that you are ready to lose. Diversify as much as possible into different types of assets such as bonds, stocks and other types of securities.
If you would like to learn more about various portfolio and investment strategies to implement for your own situation as an investor, you can consult the following resources on Movetoasia.
How to get started in the Vietnam investment market ?
There are plenty of reasons why Vietnam fits the bill of being called a prime investment country. Notably, it is known to have robust organic growth, a surging middle class in terms of wealth, and enviable labor costs. Vietnam has continued to see massive trade growth, especially with the acquisition of the Trans-Pacific Partnership (TPP) as well as the EU Free Trade Agreement.
These new dynamics have granted this fast-rising country a competitive FDI inflow that is matchless against its neighboring countries. The stock exchanges, such as HSX and HOSE, are making Vietnam stocks disputably attractive to enthusiastic foreigners.
Indeed, it is quite rare for anyone to avoid such a promising market in this age and time. It’s time to learn and get more knowledge about investing in the Vietnamese stock market and get a bang for the buck!