Vietnam aims for stock market status upgrade by 2025: minister

The Vietnamese government is striving to have the country's stock market status upgraded to an emerging market by 2025 to lure more foreign investment, Minister of Finance Ho Duc Phoc has said.

The ministry has directed the State Securities Commission (SSC) to coordinate efforts with the State Bank of Vietnam and Ministry of Planning and Investment to achieve the upgrade, Minister Phoc said at a parliament Q&A session on Monday.

The SSC, the country’s stock market watchdog, has also met with index managers in the U.S. to provide details of Vietnam’s financial markets, Phoc added.

Vietnam is classified as a frontier market by two global index providers - MSCI, which stands for Morgan Stanley Capital International, and FTSE Russell, a subsidiary of the London Stock Exchange Group.

In its latest review in September, FTSE Russell kept Vietnam on the watch list for a possible reclassification from frontier to secondary emerging market status due to a failure to meet the settlement requirements. The next reviews are due in March and September next year.

Meanwhile, the Vietnamese stock market has met just eight out of 17 criteria set by MSCI, with prefunding and foreign ownership caps both seen as major bottlenecks to the status elevation.

Reuters reported late last month that Vietnam was planning to relax its stock market settlement procedures for foreign investors following a China model. As such, Vietnam would allow brokers to vouch for foreign investors when they buy shares. FTSE experts visited the country last month to receive updates on the new plan to break the years-long deadlock.

Market observers have estimated that once upgraded, Vietnam’s stock market would attract an additional $5-8 billion, equivalent to 0.7-1.2% of the emerging market indexes managed by MSCI and FTSE Russell.