Upgrade in classification expected for Vietnam’s stock market

FTSE Russell is to announce a preliminary update notice on the FTSE National Stock Ratings on April 1, which will indicate whether Vietnam’s ranking will be upgraded from a frontier market to a secondary emerging market.

In September 2021, Vietnam’s stock market, along with Iceland’s, Mongolia’s, and Russia’s, was put on a watch list for upgrading. Key criteria in classification include the country’s income ranking by GNI per capita, risk exposure, markets, regulatory frameworks, foreign exchange markets, equity markets, and the performance of cash flows and securities signing and clearing.

If Vietnam’s market is upgraded to a secondary emerging market by FTSE, it may have the opportunity to transform efforts in attracting foreign investment, especially from investment funds.

Dr. Vo Dinh Tri, Lecturer at the University of Economics Ho Chi Minh City and the IPAG Business School Paris and a member of AVSE Global, said that under the criteria to enter the FTSE secondary emerging market ranking group, Vietnam will not face too many difficulties but the problem lies in determination to implement. Vietnam’s goal of being ranked as an advanced emerging market by 2025, on par with Thailand, Malaysia, and Taiwan (China), requires other efforts, not just in infrastructure.

He assessed that existing bottlenecks lie in the clearing and custody mechanism. Current restrictions disadvantage retail investors and even foreign investors.

“To be upgraded, protecting the interests of retail investors, enabling foreign investors’ access to the market, and having a modern high-frequency trading system are tasks that require a lot of effort and determination,” Dr. Tri said.