The recent efforts of the Vietnamese stock market have been somewhat recognized, when the investment data research company MSCI reduced the number of criteria that need improvement of the market from 9 to 8.
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| Most likely, Vietnamese stocks will be included in the MSCI review list for upgrade in the upcoming cycle in 2025. |
Progress noted
Vietnam’s stock market is unlikely to cause any surprises in the recently released MSCI Global Market Accessibility Assessment Report 2024. However, the good news is that, unlike in 2023, MSCI assessed that Vietnam has improved its transferability rating, moving from “needs improvement” to “no major issues”.
“Vietnam has seen improvements in transferability thanks to increased off-exchange and in-kind transfers from regulatory changes,” MSCI pointed out.
Thus, after reducing 1 criterion, there are only 8 criteria that the Vietnamese stock market has not met, including foreign ownership limit, foreign block room, equal rights for foreign investors, freedom of the foreign exchange market, investor registration & account establishment, market regulations, information flow and clearing.
Along with S&P Down Jones (Standard & Poor's) and FTSE Russell, MSCI is one of the three major market rating organizations with more stringent criteria that must be met to upgrade the market. However, in reality, it is not necessary to meet all the criteria.
Typically, the Philippines has been classified as an emerging market by MSCI, but in the June 2024 report, there are still 5 criteria that “need improvement”. Vietnamese experts predict that it is likely that Vietnam will be included in the MSCI review list for upgrading in the upcoming cycle in 2025, and then can be officially upgraded in 2026.
Meanwhile, the near-term goal that Vietnam's stock market is aiming for is to be upgraded from a frontier market to a secondary emerging market by FTSE Russell after many years on the watch list since September 2018. In the most recent report, in March 2024, FTSE Russell highly appreciated Vietnam's efforts through the commitment of Prime Minister Pham Minh Chinh showing his determination to upgrade.
The report also highlighted that a working group is working with the State Securities Commission to assess proposals for a new payment model and encouraged meetings between Vietnamese organizations and the international community to better understand the difficulties in accessing the Vietnamese securities market.
“To achieve the target of upgrading by 2025, Vietnam must soon confirm and widely disseminate the new payment model, including completing the necessary roles and responsibilities in the payment model. Along with that, Vietnam must provide a roadmap, with specific milestones, to achieve the target,” FTSE Russell pointed out specific directions in the latest report, along with assessments of the Vietnamese stock market.
Continued efforts to upgrade the market
Looking back at the journey of meeting the criteria for upgrading the market over the past half year, Mr. Do Thanh Tung, Deputy Director of Analysis at Rong Viet Securities Joint Stock Company, said that the efforts to handle the issue of foreign investors' deposits are the catalyst that can help the upgrade take place in the near future. Preparations for the upgrade have been actively implemented. However, the delay in putting the KRX system into operation has caused some disappointment, but expectations will still be ahead.
The implementation of the KRX system is expected by many experts to create a premise to solve the current bottlenecks of the Vietnamese stock market, in order to move towards upgrading the market from frontier to emerging. At the end of April 2024, the Ho Chi Minh City Stock Exchange (HoSE) submitted a document to the State Securities Commission on approval of the official operation of the above project, and at the same time sent securities companies a plan to convert the trading system to KRX.
However, the above plan had to be stopped because the State Securities Commission considered that there was not enough basis to approve HoSE's proposal. In addition to reporting to the Ministry of Finance, Vietnam Stock Exchange (VNX), beneficiaries (HNX, VSDC) to ensure compliance with legal regulations or documents of members on connection readiness, the project also needs a General Acceptance Minutes. The KRX system must also be approved for information security level (level 4) according to regulations of the Ministry of Information and Communications.
Technically, according to Mr. Nguyen Chi Thanh, General Director of SHS, to operate the new system, it takes less than 1 working day to convert data from the old system to the new system, so the KRX project can be put into operation as soon as the September 2nd holiday. There are many missing tasks that the State Securities Commission pointed out. Not to mention, investors are the ones who directly trade on the new system, so they have the right and need to fully understand the differences of the new system before putting it into operation.
Much effort is needed to put the KRX project into operation, as well as to move towards the goal of upgrading. In early June, the State Securities Commission approved the State Securities Commission's Action Program to implement the Strategy for Stock Market Development to 2030.
This is a document following the Strategy for Stock Market Development to 2030 approved by the Prime Minister and the Action Program of the Ministry of Finance with solutions concretized into specific tasks/projects associated with each development stage, with specific assignment of tasks to each unit under and directly under the State Securities Commission to achieve the goals. Accelerating the journey to upgrade the market is also not outside the set plans.
Source: https://baodautu.vn/chung-khoan-cho-giai-bai-toan-nang-hang-d217402.html
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