Vietnam takes another important step to upgrade its stock market

Gradually loosen payment procedures for foreign investors

Vietnam is planning to ease payment procedures on the stock market for foreign investors, Reuters reported. This is considered an important measure to convince rating agencies in the process of upgrading Vietnam's stock market to emerging market status, which could attract hundreds of millions of dollars in new investment capital.

Vietnam will allow securities firms to underwrite foreign investors’ purchases of shares, a move that FTSE Russell said was a step forward and could help remove a regulatory hurdle that has hampered the market’s upgrade for years.

Currently, Vietnam is classified as a frontier market by market rating organizations FTSE Russell and MSCI. This has become a barrier for organizations and investment funds to invest in listed companies. Recently, representatives of FTSE Russell had a meeting with the State Securities Commission, updated policy/market information, and provided detailed solutions to remove obstacles in the criteria for upgrading Vietnam's stock market.

Reuters quoted the assessment of Ms. Le Thi Le Hang - Director of Strategy of SSI Securities - who directly participated in the plan: "The meetings with FTSE Russell were very positive and could lead to the upgrading of Vietnam's stock market from frontier to secondary emerging market by September 2025".

To meet that timeline, FTSE Russell would need to announce the upgrade as early as September 2024, six to 12 months before the official announcement. If upgraded, Vietnam’s stock market would join the likes of Indonesia, the Philippines, Qatar and China.

Many stocks benefit from market upgrade

In case Vietnamese securities are upgraded to emerging market status by FTSE and MSCI, securities in particular and the Vietnamese economy in general will benefit in many aspects such as enhancing global integration, raising the level of the Vietnamese securities market and national position.

According to observations from the expert group of Mirae Asset Securities Company, most markets 1-2 years before being officially upgraded by FTSE showed signs of growth. Specifically, Qatar increased by more than 45% (September 2013 - September 2014), Saudi Arabia increased by more than 23% (March 2017 - March 2018), Romania increased by more than 18% (September 2018 - September 2019).

Many real estate stocks are expected to benefit positively, such as VIC, VHM, VRE... The securities group has many representatives expected to participate, such as SSI, VND, VCI, VIX... In addition, some stocks in banking, food, electricity, steel, oil and gas... are also expected to have positive effects after the securities are upgraded.

Similar to when upgraded by MSCI, the stock markets all improved positively. Specifically, China increased by more than 26% (January 2016 - April 2017), Saudi Arabia increased by more than 25% (June 2017 - June 2018), Kuwait increased by more than 27% (November 2018 - January 2020).

BSC Securities Company's estimate shows that if MSCI and FTSE upgrade Vietnam to an emerging stock market, there will be about 3.5 - 4 billion USD to buy new Vietnamese stocks.

Source