Vietnam continues to wait on upgrade from frontier stock market

In this year’s latest update to FTSE Russel’s Country Classification, which is released in September, the country remains in the watch list.

"Progress has been slower than anticipated, in part due to Covid-19," the U.K. stock analytics provider said.

The country has also yet to meet the settlement cycle criterion, which is currently rated as "restricted" due to the practice of conducting a pre-trading check to ensure funds are available.

It said further that improvements to the process of registering new accounts are required, as is the introduction of an efficient mechanism to facilitate trading between non-domestic investors in securities that have reached, or are approaching, the foreign ownership limit.

The State Securities Commission has however demonstrated renewed energy in seeking a workable solution that would remove the need for pre-funding, FTSE Russel said.

"Finalization of the required roles and responsibilities, within the settlement model, that are aligned to the new legislation remains a critical next step."

FTSE Russell continues to encourage Vietnamese market authorities to provide clearer guidance on the steps and timeframe for implementation, it added.

The country will be reviewed again in March.

SSI Securities’ research department has said an upgrade would attract more foreign portfolio investment.

One of the key factors in the upgrade would be the new trading system, KRX, being developed by the Korean Exchange, it said.

A central counterparty clearing system is another requirement to reduce payment risks in case a transaction is not completed, it added.