How would the stock market change if it was upgraded?

Many stocks break out

Vietnam's stock market is heading towards a rating upgrade by FTSE Russell (a global stock market rating and rating organization) in early October.

According to experts, if upgraded, the market will have many changes and can attract large capital flows.

Mr. Nguyen The Minh - Director of Analysis, Retail Client Division, Yuanta Vietnam Securities Joint Stock Company - said that the upgrade effect always attracts great attention from investors. Yuanta Vietnam Securities has conducted statistics on the stock market developments in countries that FTSE Russell has recently considered upgrading: Kuwait, Saudi Arabia, Romania.

For Kuwait, after the announcement in September 2017, the market fell sharply in the first three months. The reason was the US Federal Reserve (Fed) raising interest rates and the negative impact of oil prices on the economy .

Saudi Arabia's stock index rose 20% in the first year after being upgraded by FTSE in March 2018.

Romania's stock market fell sharply after the announcement of market upgrade in September 2019 due to the COVID-19 shock, at times losing up to 25%, then recovered impressively.

What will happen to Vietnam's stock market if it is upgraded? (Illustration: Nhan Dan Newspaper).

" Upgrading often brings positive effects in the short term, but in the long term, the stock market's performance will depend on many macro factors (monetary policy, oil prices, politics , etc.) and internal factors. At the current stage, the Fed's reduction of interest rates after a period of maintaining high interest rates can be a positive supporting factor for the upgrade story of the Vietnamese stock market ," said Mr. Minh.

According to Mr. Minh, a notable issue is that the foreign ownership ratio in the Vietnamese stock market has dropped to only 12%. This is mainly due to the difference in USD/VND interest rates, the trend of investing in global technology, the lack of new goods and the limitation of foreign room.

Therefore, the Fed's interest rate cut, along with the IPO wave and the development of financial products in the stock market, will be the driving forces to soon attract foreign investors to return.

Sharing the same view, Mr. Tran Hoang Son - Director of Market Strategy, VPBank Securities Joint Stock Company (VPBankS) - also said that the upgrade effect was partly reflected in the market in late August and early September. This caused the growth momentum to slow down and profit-taking pressure to take place strongly right before the September 2 holiday.

The closer the official announcement date gets, the greater the impact of the upgrade news will be. Mr. Son expects that on October 7, FTSE Russell will announce that Vietnam has met the upgrade standards and the stock market will have explosive phases.

He also said that the upgrade news will be the next springboard for growth in the fourth quarter. Stocks related to financial services, securities and banking can regain their momentum.

After the upgrade, the market will continue to receive business results. Usually, businesses with good results will have their stocks increase in price 15 to 20 days in advance. This is a factor for investors to pay attention to in order to prepare a good portfolio in the near future.

Waiting for big money

Mr. Le Thanh Hung - Investment Director, UOBAM Vietnam Fund Management Joint Stock Company - shared that if the Vietnamese stock market is upgraded to "Emerging Market" by FTSE Russell in October this year, the outlook will be very positive.

The first impact is that a significant amount of capital from foreign investors, including ETFs (estimated at about 1 billion USD) and active funds will be poured into the Vietnamese market. This will increase market liquidity, helping to improve the capital mobilization capacity of enterprises.

In addition, concerns about tariffs from the US have eased, helping to maintain the competitiveness of Vietnamese goods and the stability of FDI flows.

Mr. Hung also believes in the positive outlook for the Vietnamese stock market in the second half of 2025, based on good economic growth prospects, strong support policies from the Government to promote growth and potential from market upgrade.

The government is expected to continue boosting public investment and maintain an accommodative monetary policy with credit growth at 16% to achieve this year's GDP growth target of 8.3-8.5%.

Mr. Vo Van Huy, Head of Senior Client Department, DNSE Securities Company, commented that there is a high possibility that the Vietnamese stock market will be upgraded in the upcoming review period of FTSE Russell, scheduled for October 7.

" If Vietnam's stock market is upgraded, about 1.5 billion USD from passive funds tracking the FTSE index will flow into Vietnam. Including active funds, this number will reach 10.4 billion USD. According to HSBC, about 38% of Asian funds and 30% of emerging investment funds already hold Vietnamese stocks, so the capital flow may not be sudden, but in general, upgrading the stock market will make both foreign and domestic capital flows very positive ," Mr. Huy analyzed.

Chau Anh

Source: https://vtcnews.vn/thi-truong-chung-khoan-bien-chuyen-the-nao-neu-duoc-nang-hang-ar966817.html