Upgrading the stock market opens a new stage of development

VTV.vn - This can be said to be very good news for the Vietnamese stock market after many years of waiting and many efforts to bring the Vietnamese stock market closer to international trading standards.

Emerging market upgrade creates momentum for Vietnamese stocks

FTSE Russell officially announced the upgrade of Vietnam's stock market from a frontier market to a secondary emerging market in the early morning of October 8. There have been many efforts from the Government, the Ministry of Finance and the State Securities Commission (SSC) to improve both the quality and quantity of the stock market, perfect the legal framework, improve technology infrastructure, transparency as well as create more favorable conditions for investors to access the market... to fully meet the conditions of the rating organization. Previously, Vietnam had been on the FTSE's upgrade review list for 7 years. This can be said to be very good news for the Vietnamese stock market after many years of waiting and many efforts to bring the Vietnamese stock market closer to international trading standards. Experts predict that billions of USD will be attracted to the market after the upgrade.

Mr. Gary Harron - Head of Securities Services, HSBC Vietnam said: "Congratulations to Vietnam on the occasion of achieving an important milestone - officially being upgraded from frontier to secondary emerging by index provider FTSE Russell, showing that Vietnam's rising international position can firmly overcome short-term storms. The new status is a recognition of the joint efforts of the Government, management agencies and market participants. Especially for Vietnam, removing the "frontier market" label will have a great impact on investor behavior and confidence, change the long-term economic development trajectory of the market and reduce dependence on any single trading partner".

Mr. Brook Taylor - CEO, VinaCapital Group shared: "Upgrading to emerging market by FTSE Russell can help attract about 5-6 billion USD of investment into Vietnam. We believe that the money flow will not rush into the market at once, but having investment capital flows into the market brings a positive and meaningful turning point for the market".

Mr. Le Anh Tuan - General Director of Dragon Capital Fund Management Company commented: "I see this as a very important step because before we entered the emerging market, we were a frontier market. Almost no one cared about the frontier market anymore. So entering the emerging market is almost vital, extremely important to join the world game."

Emerging market upgrade creates momentum for Vietnamese stocks

Challenges and opportunities of Vietnam's stock market

The journey for the Vietnamese stock market to be upgraded by FTSE Russell is a difficult and arduous one. Because FTSE Russell companies evaluate the upgrading criteria not only to evaluate the law and the ability to manage the stock market, but also to evaluate the financial capacity and service provision capacity of market intermediary institutions. Therefore, in order to be upgraded, in the past time, in addition to the efforts of the management agency, there has been the support of market members.

Mr. Bui Hoang Hai - Vice Chairman of the State Securities Commission said: "Regarding the maintenance of the ranking, the Prime Minister has issued a Decision approving the Market Upgrade Project. In this project, the Prime Minister has clearly identified the upgrading target and the maintaining target, along with very specific solutions to achieve the ranking criteria and solutions to maintain the ranking. Some solutions in the project that have been proposed and have a clear implementation time can be mentioned, such as we must deploy the CCP system for transactions on the stock market; build a connection system between market members, so that market members can exchange information about matching orders automatically; deploy solutions that allow foreign investors to trade through a general account.

The project also proposes many solutions to increase and diversify the quantity of goods on the market to meet the investment needs of foreign investors. Specifically, some solutions such as Decree 245 recently issued by the Government, there are enhanced solutions such as combining the two processes of initial public offering of shares and listing of shares on the stock market. And solutions related to transparency of ownership ratio of foreign investors. In addition, to increase the quantity of goods on the market, the project also proposes solutions to diversify indices, diversify fund products, bond products, especially construction bonds, bonds for enterprises investing in infrastructure".

A very positive point is the return of foreign cash flow. After about three consecutive weeks of net selling, they have now returned to buy nearly 234 billion VND on HOSE.

Ms. Wanming Du - Director of Policy for the Asia-Pacific Index Department, FTSE Russell said: "Over the past two years, FTSE Russell has worked closely with the Vietnamese regulatory authorities, witnessing many reforms in line with international standards, such as margin-free trading or the process of handling failed transactions. We also noted detailed solution roadmaps, such as operating a central clearing mechanism by 2027, or reducing the account opening process, creating convenience for foreign investors."

Forecasting the scale of foreign capital that will flow into the Vietnamese market, Ms. Wanming Du shared: "Vietnam will participate in indexes with total asset size of hundreds of billions of USD. We estimate that the amount of passive capital that Vietnam can receive is about 1 - 1.5 billion USD. Active capital flows are about 4-5 billion USD. In total, it is estimated that there will be an additional 5-6 billion USD poured into the Vietnamese market."

Regarding the steps that Vietnam must follow to complete the upgrade process by September next year, Ms. Wanming Du commented: "The upgrade process will be divided into many steps to be implemented from now until September next year, and specifically how many steps will be decided next March. That is also when we will update Vietnam's models in facilitating global brokers to participate in the domestic market."

FTSE has mentioned the desire of foreign investors to trade through global brokers, and the State Securities Commission has also made preparations to meet this desire.

Mr. Bui Hoang Hai - Vice Chairman of the State Securities Commission shared: "This is one of the needs of index investors, which are index investment funds. Simply put, these funds invest in the index, which includes component stocks, which can be in many countries. Therefore, when it comes to each basket exchange period, if they trade directly, they will have to place orders in many countries, through many different domestic brokers, even in different time frames. Therefore, they want to place only one order and this order is placed with their partners, which are global securities companies.

After receiving proposals from international investors through FTSE Russell, the State Securities Commission has urgently coordinated with the VSDC Stock Exchange to develop a process and a flowchart to meet this need of foreign investors. We have submitted this flowchart to consult with major domestic securities companies and custodian banks, as well as experts of foreign investors. The feedback from domestic and international experts all said that this model is feasible.

Currently, we are reviewing the infrastructure, the payment transaction system of the current payment transaction system as well as the payment transaction system of securities companies to fully meet this solution. The only remaining problem is the current legal regulations at the Circular level, the State Securities Commission has urgently drafted amendments, including amendments to meet this requirement, specifically we will amend a number of articles in Circulars 120, 121, Circular 96. We will soon release this circular, get opinions from market members, as well as public opinions in the near future."

The upgrade is expected to help the capital market in general and the stock market in particular witness a qualitative change.

Upgrade to higher standards by 2030

The upgrade is expected to help the capital market in general and the stock market in particular witness a qualitative change. The market will not only welcome high-quality foreign capital, but also come with higher requirements on corporate governance or publicity and transparency. From there, it will create more motivation for management agencies, market members, businesses and investors to improve themselves.

Mr. Nguyen Van Thang - Minister of Finance said: "Upgrading is not only a destination but also a journey to develop the Vietnamese stock market to grow in quality, transparency and sustainability. The Ministry of Finance will continue to direct the State Securities Commission and related units to continue to closely follow and drastically implement the proposed solutions, creating maximum convenience for domestic and foreign investors to access the market".

In the Project to Upgrade Vietnam's Stock Market approved by the Prime Minister, in addition to the goal of fully meeting the criteria for upgrading from a frontier market to a secondary emerging market of FTSE Russell in 2025, we also aim to meet the criteria for upgrading to an emerging market of MSCI and an advanced emerging market of FTSE Russell from now until 2030.

As the Minister of Finance shared, the official announcement of FTSE's upgrade today is only the initial result, we still have many higher goals and need to implement them more seamlessly and drastically.

Source: https://vtv.vn/nang-hang-thi-truong-chung-khoan-mo-ra-giai-doan-phat-trien-moi-100251009062153953.htm