Vietnam eyes stock market’s upgrade to emerging status before 2025

Jul 05, 2022 / 01:45 PM

The ministry has been in frequent contact with both MSCI and FTSE Russell to update new information and their requirements to finalize the legal framework or address shortcomings in the market.

The Ministry of Finance expects the local stock market to upgrade from its current frontier market status to an emerging one before 2025.

Investors at a securities company in Hanoi. File photo

Deputy Minister of Finance (MoF) Nguyen Duc Chi share the view at the Government’s monthly press briefing on July 4.

According to Chi, the goal is included in the draft strategy for Vietnam’s stock and insurance market development until 2025, with a vision for 2030.

In a detailed report published by the MoF, the ministry stressed the market’s upgrade prospects do not depend on the view of the authorities, but on financial services providers such as FTSE Russell or MSCI along with their respective evaluation procedures.

The MoF, however, has been working on improving the probability of a market upgrade, including the issuance of the Law on Securities in 2019, and the revision of the Law on Investment and Business Law in 2020, which provided positive changes regarding the ownership limit of foreign investors; simplified procedures for investment capital, information access; opening investors’ accounts; new financial instruments and products diversification.

“The MoF has been in frequent contact with both MSCI and FTSE Russell to update new information and their requirements to finalize legal framework,” he said.

In the coming time, the MoF would continue to focus on putting into operation the new transaction system for the stock market; diversifying market products with higher quality to attract foreign investors; supporting public companies in raising corporate governance capability; promoting green products and financial schemes.

In the latest move, the stock market is set to allow shares to be transferred to investors’ accounts within the trading hours of T+2, instead of T+3.

General Direct of VinaCapital Don Lam in a recent conference suggested Vietnam’s stock market upgrade would bring in billions of dollars from foreign investors.

Sharing the view, Economist Can Van Luc said an emerging market status would benefit Vietnam’s credibility in the global capital market and eventually lead to a higher sovereign rating.

On May 26, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Vietnam to ‘BB+’ from ‘BB’. The rating agency also affirmed the country’s short-term rating at ‘B’ with a stable outlook.

S&P attributed favorable changes in the policy environment to its evaluation, saying they have bolstered investor confidence in the country's economic and financial stability.