The door to upgrade is wide open

2025 is expected by many experts to be a turning point for the stock market. Recently, the State Securities Commission (SSC) has had solutions to solve the upgrade problem by amending the Securities Law; removing the bottleneck of pre-margin transactions for foreign investors and the door to upgrade has opened wider. According to the report "Vietnam at a glance: The story of capital" recently released by HSBC Global Research, the Vietnamese stock market will have the best performance in Southeast Asia in 2024, but recorded a decline in foreign investment flows.

HSBC’s securities experts say there are barriers to trading and infrastructure, and limited transparency and disclosure by businesses. However, positive changes are taking place. Vietnam has abolished margin requirements before trading securities, meeting the key criteria for upgrading from a frontier market to an emerging market, which is likely to be achieved by the end of this year.

Investors follow the performance of BSR shares in the first trading session on HOSE.

FTSE Russell, a leading index provider, estimates that the upgrade could attract $6 billion in foreign investment, equivalent to more than 1% of GDP, into Vietnam. Dragon Capital Securities (VDSC) expects that FTSE could recognize Vietnam as eligible for the upgrade in March 2025, creating a catalyst for investor sentiment.

“According to VDSC, the Vietnamese stock market has resolved the two criteria required by FTSE to be upgraded. FTSE may recognize Vietnam as eligible for upgrading in the March 2025 review period. Although it has not been officially included in the FTSE Emerging Index basket, expectations from domestic investors as well as foreign capital flows will bring positive trading sentiment to the market. It is forecasted that the completion of this process will attract a large amount of foreign capital to the stock market 6 to 8 months in advance,” said Mr. Tran Hoang Son, VPBank Securities Strategy Director (VPBanks).

The stock market's liquidity in 2025 is forecast to reach more than VND23,000 billion, possibly as high as VND26,000 billion. Based on that liquidity, the VN-Index reached over 1,400 points at one point while it fluctuated around 1,350 points throughout the year. If upgraded, Vietnam could mobilize 1.7 billion USD in passive capital and 6-7 billion USD in active capital.

Creating conditions for foreign investors

Chairwoman of the State Securities Commission Vu Thi Chan Phuong said: Upgrading the stock market from frontier to emerging is a major and correct policy of the Government and has been closely directed by the Prime Minister in recent times. In 2025, the goal is to upgrade the Vietnamese stock market from frontier to emerging, according to the Stock Market Development Strategy to 2030 approved by the Prime Minister.

International financial institutions, experts, and market members all assess that, when upgraded, the Vietnamese stock market will attract a large amount of capital, promoting growth in market size and liquidity. This is a great determination that the State Securities Commission is actively implementing. Circular 68/2024/TT-BTC was issued, marking an important step forward, removing legal bottlenecks, meeting the criteria for upgrading by FTSE Russell.

Through practical records, the implementation of transactions that do not require foreign institutional investors to deposit money in advance is favorable, meeting the transaction needs of investors and ensuring safety and transparency from market members and related parties. Along with that, the Securities Law (amended) was issued, adding many regulations to meet the standards for upgrading the stock market.

“The Ministry of Finance and the State Securities Commission will continue to work with the State Bank and the Ministry of Planning and Investment to develop solutions to meet the upgrading criteria; at the same time, actively implement solutions to create more favorable conditions for foreign investors to invest in the Vietnamese market,” said a representative of the State Securities Commission.

Accordingly, amend legal regulations related to procedures for opening investment capital accounts in the direction of minimizing procedures and shortening account opening time; update and fully publicize the maximum State ownership ratio for conditional business lines, limiting access for foreign investors.

The management agency is making every effort to remove bottlenecks such as implementing the central clearing partner (CCP) mechanism, coordinating proposals to expand foreign room, disclosing information in English... to meet the upgrading criteria according to MSCI standards (a US financial company).

According to baotintuc.vn