Stock market upgrade to help Vietnam lure another $10B in investment

By VNA   May 2, 2024 | 12:07 am PT
Stock market upgrade to help Vietnam lure another $10B in investment
An investor looks at stock prices on the screens at a brokerage in Ho Chi Minh City. Photo by VnExpress/Quynh Tran
The elevation of Vietnam's stock market from Frontier to Emerging status can help it attract an additional US$10 billion in both direct and indirect investment.

If Vietnam is classified by FTSE Russell as a secondary emerging market, it may gain 0.7-1% in the FTSE Emerging Index, thus helping the Vietnamese stock market lure between $800 million and $1 billion in new investments from exchange-traded funds, experts at KB Vietnam Securities JSC (KBSV) said, citing the World Bank.

Nearly 10 years after starting the stock market upgrade process, Vietnam is currently in the final stages of completing the remaining criteria to be upgraded to an emerging market. This will bring benefits in many aspects to the market, especially in terms of credibility and the ability to attract foreign capital inflows.

Currently, there are three rating organisations in the world evaluating and classifying the market, FTSE Russell, MSCI, and S&P Dow Jones.

Vietnam is now in the frontier market group and accounts for a large proportion of the indexes of organisations, 37%, 29%, and 12.3% respectively for the FTSE Frontier Index Series, MSCI Frontier Markets Index, and S&P Frontier BMI.

In addition, the country has been included in the watch list for upgrading to emerging market status by FTSE Russell since 2018 and is monitored and evaluated annually by MSCI and S&P Dow Jones.

Vu Chi Dung, head of the International Cooperation Department under the State Securities Commission, said that upgrading the stock market will be a significant signal to the international community, demonstrating that Vietnam is on track to develop into a market economy in its true nature.

As a result, the perspective of international investors on the investment and business environment in Vietnam will become more positive, Dung added.

This will also help increase the number of institutional and major investors, thereby promoting professionalism and sustainability in investment activities and, in turn, reducing market volatility caused by the psychological impact of a large number of individual investors, he noted.

According to KBSV, Vietnam is closer to an opportunity of being officially considered for an upgrade by FTSE Russell.

The firm expects that the earliest roadmap for Vietnam's stock market upgrade announcement could be in September this year and an official upgrade by FTSE Russell in the assessment period one year later.

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