HANOI, Nov 6 (Reuters) - Vietnam plans to lift some limits on the foreign ownership of listed companies, the country’s stock market regulator said on Wednesday, in a move analysts said could boost overseas interest in one of Asia’s fastest-growing economies.

A draft securities law presented by Vietnam’s finance ministry at a forum held in Hanoi on Wednesday would broadly remove the existing 49 percent foreign ownership cap on most local companies.

“We expect the new law to encourage the development of the market in a faster, stronger and more sustainable manner,” deputy finance minister Huynh Quang Hai said at the forum.

The draft law is expected to be submitted to lawmakers for approval next year and would take effect in January 2020.

A government decree issued in 2015 had already removed the foreign ownership limit on some companies, but only a handful of firms, including Vietnam’s largest dairy company Vinamilk , raised limits after the decree was issued.

Foreign ownership caps on companies operating in “sensitive and important” sectors such as security, defence, telecommunication and insurance, will be kept at 49 percent, according to Nguyen Quang Viet, an official in the State Securities Commission’s legal department.

The limit for banks will remain at 30 percent, he added.

“But the new law would remove the limit on companies operating in many of more than 200 of the conditional sectors,” said Viet, who added that it would pave the way for more foreign investment in the market.

In Vietnam, “conditional sectors” refers to industries subject to additional regulations which would override the limits set out by the securities law.

Can Van Luc, a government economic advisor, said the government would consider raising limits on the foreign ownership of banks on a case-by-case basis.

Vietnam’s stock market was Asia’s top performer last year, growing 48 percent, backed by strong exports growth and robust foreign investment inflows.

The Finance Ministry said in a statement last month the new law would also pave the way for several local companies to be included in the MSCI emerging markets index.

In July, there were more than 1,500 companies listed on local stock markets in Vietnam, with a total market capitalisation of 3,881 trillion dong ($166.4 billion), accounting for 77.5 percent of the gross domestic product, according to data from the Finance Ministry.

Foreign investor holdings stood at $34.2 billion in the same period, the ministry said. ($1 = 23,324 dong) (Reporting by Khanh Vu; Editing by James Pearson & Simon Cameron-Moore)