Two days ago, a piece of news of "Li Ka-shing marching into Vietnam" was posted on Weibo Corp's hot search, and the Vietnamese market became an "Internet celebrity".

The Vietnamese stock market has performed well over the past two years, rising more than 100 per cent last year, making it the best in the world. But recently, the market for "internet celebrities" has plummeted, with Vietnam's VN30 index plunging 20 per cent from its high this year.

The collapse of the Vietnamese stock market may have something to do with the financial regulatory storm that is under way.

The Vietnamese government carried out a "thorough cleaning", and Vietnamese Prime Minister Fan Minqin ordered the authorities to crack down on irregularities in the stock, bond and real estate markets and launched a series of investigations.

Chen Wenyong, chairman of Vietnam's National Securities Commission, was removed from all his party posts and Le Hai Cha, general manager of the Ho Chi Minh City Stock Exchange, was expelled from the party, according to a notice issued by Vietnam's Central Inspection Commission on May 18. At the same time, the Vietnam Securities Commission also warned Nguyen Qinglong, former chairman of the National Securities Commission, party committee secretary of the Hanoi Stock Exchange and chairman of the board of directors of the Vietnam Stock Exchange, and Nguyen Shan, chairman of the Vietnam Securities Depository Center.

In addition to accountable officials, Vietnamese police have arrested a number of senior executives of securities and listed companies suspected of manipulating the market since the end of March. On Wednesday, Vietnam's Ministry of Public Security detained Do Duc Nam, chief executive of Tri Viet Securities, on suspicion of manipulating share prices, as well as Do Thanh Nhan, chairman of Louis holding Group. Affected by the news, Louis real estate fell 9.33%, the lowest since July last year, and Louis capital also fell 6.9%.

The survey dealt a severe blow to the Vietnamese stock market, which suffered a technical correction on Thursday, with the VN index falling 10 per cent from its January high.

Vietnam's Ministry of Finance said the investigation could last for the whole of 2022, according to Bloomberg.

At present, the National Securities Commission has ordered Ho Chi Minh and Hanoi to start disclosing proprietary trading of securities companies by May 23, and requires that when the company's share price shows signs of rising or falling limit within five to 10 trading days, warnings should be issued and information disclosed.

At the same time, the Vietnamese government also pays close attention to the issuance and trading of corporate bonds.Although Vietnam's corporate bond market is still relatively small, corporate bond issuance has soared in response to the epidemic over the past two years, raising concerns about risk accumulation.

Vietnamese real estate in the Internet is "thriving", but it is actually exploding. Xinhuangming Group disclosed false information and concealed bond issuance information, which ignited the fuse of Vietnamese real estate. Real estate developer FLC Group is under investigation on suspicion of share price manipulation, and Huong Tran Kieu Dung, vice chairman of FLC Group, has been arrested.

Fred Burke, a senior consultant at the law firm Baker McKenzie, believes that the Vietnamese securities market has taken a big step forward and is in public. The move sends a strong signal to resolutely enforce the law in areas such as insider trading and transparency.This may be the biggest market crackdown in the history of the Vietnamese stock market.

Phung Trung Kien, founder of Vietnam Holdings, an investment consultancy, interprets that government efforts to manipulate stock prices and overheated corporate bond issuance may have an impact on market sentiment and cash flow in the short term, but this is good for the market in the long run.

In recent years, the Vietnamese market has become more attractive to multinational companies such as Intel Corp and Samsung Electronics, setting up more and more factories and shops in Vietnam, but Vietnam's capital market is relatively backward. It is considered to be less developed than other countries such as Malaysia, Indonesia and Thailand.

Over the past decade, Vietnam has attracted an average of about $15 billion a year in foreign direct investment, but only $11 billion in portfolio investment over the same period, according to data compiled by Bloomberg.

The Vietnamese government will step up law enforcement as the main starting point, hoping to upgrade from marginal markets (frontier markets) to secondary emerging markets. The Vietnamese stock market has attracted the attention of FTSE Russell since 2018, putting it on the shortlist of emerging markets.

This time, Vietnam has launched an extensive crackdown on securities irregularities, vigorously promoting a new era of transparency, or improving its market position and bringing more foreign investment.