Vietnam still on watch list for reclassification to secondary emerging market status: FTSE Russell

By Dinh Vu, Huu Binh
Sat, September 30, 2023 | 11:35 am GMT+7

Vietnam remains on the watch list for a possible reclassification from frontier to secondary emerging market status as the market has yet to meet the settlement requirements stipulated in the FTSE Equity Country Classification Framework.

According to its September report, FTSE Russell, a subsidiary of the London Stock Exchange Group (LSEG), said the Vietnamese market continues to pursue various regulatory reforms and an upgrade to the main trading platform, which FTSE Russell continues to monitor.

However, the rating firm spoke highly of the Vietnamese government’s commitments, saying the State Securities Commission (SSC) is working hard to seek a workable solution to the issue of pre-funding.

FTSE Russell said Vietnam was added to the watch list in September 2018 for possible reclassification to secondary emerging market status. Progress has been slower than anticipated, in part due to Covid-19, it noted.

Vietnam's benchmark VN-Index inched up 1.72 points, or 0.15%, to 1,154.15 on September 29, 2023. Photo by The Investor/Trong Hieu.

Vietnam's benchmark VN-Index inched up 1.72 points, or 0.15%, to 1,154.15 on September 29, 2023. Photo by The Investor/Trong Hieu.

“Vietnam has yet to meet the ‘Settlement Cycle (DvP)’ criterion, which is currently rated as ‘Restricted’ due to the market practice of conducting a pre-trading check to ensure the availability of funds prior to trade execution,” it commented. Since, by default, the market does not experience failed trades, the ‘Settlement - costs associated with failed trades’ criterion is unrated.

FTSE Russell stressed that Vietnams need improvements to the process for the registration of new accounts and the introduction of an efficient mechanism to facilitate trading between non-domestic investors in securities that have reached, or are approaching, their foreign ownership limit.

Although progress on the planned market reforms has remained slow, a recommitment to the work required has been made by senior levels of government, it said, adding the SSC has demonstrated renewed energy in seeking a workable solution that would remove the need for pre-funding.

FTSE Russell said it continues to maintain a constructive relationship with the SSC, the World Bank Group and E&Y who are supporting the wider market reform programme, and other key market authorities.

“Finalisation 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 the Vietnam market authorities to provide clearer guidance on the steps and timeframe for implementation,” it noted.

Vietnam will remain on the watch list as a frontier market and reviewed for possible reclassification as a secondary emerging market within the FTSE Equity Country Classification scheme at the Interim Review in March 2024, it added.

According to major international rating agencies and financial institutions, Vietnam has made many improvements and met a number of important criteria. However, they noted the pre-funding requirement and strict limits on foreign ownership of shares are among the main hurdles to Vietnam's emerging market status upgrade. Of which, the pre-funding requirement is seen as the main problem.

Investors usually settle their trades two days after a deal in open markets, but in Vietnam they have to ensure the availability of funds prior to trade execution, which adds a significant cost for traders who execute multiple daily operations.

The other major hurdle is Vietnam’s strict limit on foreign ownership, which for banks is as low as 30% and has already been attained for many top lenders. Foreign investors are lobbying for gradually raising the limit to 35%.

Both issues require practical coordination among relevant agencies and ministries such as the State Bank of Vietnam (SBV) and the Ministry of Planning and Investment to solve, they said.

In the most recent analysis, FTSE Russell gave an optimistic assessment of the Vietnamese stock market. The firm mentioned some of Vietnam's achievements such as a GDP growth rate of 8% in 2022, the FTSE Vietnam 30 Index increasing 12% since the beginning of 2023, and cooperation with FTSE Russell and the Singapore Stock Exchange (SGX). These will help Vietnam develop a comprehensive ecosystem to help foreign investors access Vietnamese stocks and control related risks, it said.

Top Vietnamese broker Saigon Securities (SSI) assessed that the opportunity for the Vietnamese stock market to be upgraded by FTSE Russell may be clearer in 2024. The possibility of upgrade by Morgan Stanley Capital International (MSCI) in the following years would require high efforts and determination of all market players.

Closing Friday, Vietnam's benchmark VN-Index inched up 1.72 points, or 0.15%, to 1,154.15.

Comments (0)
  • Read More
Gold exchange, gold derivatives, gold ETFs proposed to be launched in Vietnam

Gold exchange, gold derivatives, gold ETFs proposed to be launched in Vietnam

Forming a gold exchange under state management in Vietnam is suitable to the reality, said Dao Xuan Tuan, head of the foreign exchange management department under the State Bank of Vietnam (SBV).

Finance - Wed, October 22, 2025 | 9:00 pm GMT+7

Real estate major Novaland wins key approval for $5 bln project in central Vietnam

Real estate major Novaland wins key approval for $5 bln project in central Vietnam

Novaland Group (HoSE: NVL), one of Vietnam’s leading property developers, has received investment approval for its flagship project worth $5 billion in the central province of Lam Dong after years of delay due to legal obstacles.

Real Estate - Wed, October 22, 2025 | 4:20 pm GMT+7

Vietnam's plastics heavyweights Tien Phong, Binh Minh report profit surges

Vietnam's plastics heavyweights Tien Phong, Binh Minh report profit surges

Tien Phong Plastic (HNX: NTP) recorded pre-tax profit of nearly VND949 billion ($36.04 million) in the first nine months of the year, exceeding its full-year target by 10.85%, while Binh Minh Plastic (HoSE: BMP) achieved record net profit of VND350 billion ($13.29 million) in Q3, surpassing its VND330 billion milestone set in the previous quarter.

Companies - Wed, October 22, 2025 | 4:17 pm GMT+7

Vietnam, Finland firms sign multiple MoUs on satellite, cybersecurity, aviation partnerships

Vietnam, Finland firms sign multiple MoUs on satellite, cybersecurity, aviation partnerships

A series of cooperation agreements were signed between Vietnam and Finland on Tuesday, within the framework of Party chief To Lam's official visit to Helsinki, while bilateral relationship was lifted to a "strategic partnership".

Economy - Wed, October 22, 2025 | 12:43 pm GMT+7

Trung Nam Ca Na seeks to convert agri-forest land for $147 mln industrial park in central Vietnam

Trung Nam Ca Na seeks to convert agri-forest land for $147 mln industrial park in central Vietnam

Industrial park developer Trung Nam Ca Na is seeking approval to convert about 170 hectares of agricultural and forest land for the construction of a VND3,875 billion ($147 million) project in Vietnam’s central coastal province of Khanh Hoa.

Industrial real estate - Wed, October 22, 2025 | 10:54 am GMT+7

PV Power's arm posts 5-fold jump in Q3 profit on margin recovery

PV Power's arm posts 5-fold jump in Q3 profit on margin recovery

PetroVietnam Power Nhon Trach 2 JSC (HoSE: NT2) reported a sharp rebound in third-quarter earnings as improved margins and higher revenue lifted profits nearly fivefold from a year earlier.

Companies - Wed, October 22, 2025 | 8:37 am GMT+7

TCBS overtakes SSI to become Vietnam’s largest securities company by market cap

TCBS overtakes SSI to become Vietnam’s largest securities company by market cap

Over 2.3 billion shares of Techcom Securities JSC (TCBS) debuted on the Ho Chi Minh City Stock Exchange (HoSE) on Tuesday. The stock, TCX, recorded the highest price and the largest market capitalization in the Vietnamese securities sector.

Finance - Tue, October 21, 2025 | 10:27 pm GMT+7

Indonesia’s palm oil industry becomes investment magnet

Indonesia’s palm oil industry becomes investment magnet

Indonesia’s palm oil sector attracted IDR52.7 trillion, or approximately $3.2 billion, in investment during the first nine months of this year, with the money going into enabling the country to capture more value out of its top commodity, the country’s Ministry of Investment reported.

Southeast Asia - Tue, October 21, 2025 | 9:34 pm GMT+7

Indonesia reports strong job, investment growth

Indonesia reports strong job, investment growth

The Indonesian Coordinating Ministry for Economic Affairs reported strong job and investment growth during the first year of President Prabowo Subianto’s administration, compared with the first year under his predecessor.

Southeast Asia - Tue, October 21, 2025 | 9:29 pm GMT+7

Singapore grants conditional approval for 1GW low-carbon power import from Malaysia

Singapore grants conditional approval for 1GW low-carbon power import from Malaysia

Singapore has granted conditional approval to import 1 GW of low-carbon electricity from the Malaysian state of Sarawak, marking a new phase in the energy partnership between the two countries.

Southeast Asia - Tue, October 21, 2025 | 9:26 pm GMT+7

Margin lending in Vietnam’s stock market hits record, but not worrisome

Margin lending in Vietnam’s stock market hits record, but not worrisome

Despite margin debt in Vietnam’s stock market surging sharply, experts believe that current margin pressure is not yet a major concern as top securities firms have significantly strengthened their capital buffers.

Finance - Tue, October 21, 2025 | 4:23 pm GMT+7

Lenders in Vietnam now in low-rate lending race: ACB exec

Lenders in Vietnam now in low-rate lending race: ACB exec

The biggest “headache” for banks in Vietnam now is that profit margins are getting thinner, said CEO of Asia Commercial Bank (ACB) Tu Tien Phat.

Banking & Finance - Tue, October 21, 2025 | 4:00 pm GMT+7

PV Gas - 35 years of innovation and technological leadership in Vietnam’s gas industry

PV Gas - 35 years of innovation and technological leadership in Vietnam’s gas industry

Over the past 35 years of establishment and development (1990-2025), PV Gas, a subsidiary of state-owned giant Petrovietnam, has affirmed its pioneering position in Vietnam’s gas industry, marked by a series of groundbreaking achievements in science and technology.

Companies - Tue, October 21, 2025 | 3:45 pm GMT+7

Vietnam's consumer finance major F88 achieves 90% of year's profit target after 9 months

Vietnam's consumer finance major F88 achieves 90% of year's profit target after 9 months

F88 Investment JSC (F88), a leading consumer finance company in Vietnam, reported a cumulative pre-tax profit of VND603 billion ($22.88 million) in the first nine months of 2025, a 2.5-fold increase year-on-year, reaching 90% of its full-year target of VND673 billion.

Companies - Tue, October 21, 2025 | 3:15 pm GMT+7

Vietnam corporate earnings to be driven by credit expansion, trading activity, property recovery

Vietnam corporate earnings to be driven by credit expansion, trading activity, property recovery

With Q3 earnings season underway, results are expected to come in broadly in line with expectations. Financials should remain the largest contributors, benefiting from credit expansion and trading activity, while real estate continues to recover as project launches and sales rates improve, writes Tung Dang, associate director at Dragon Capital.

Economy - Tue, October 21, 2025 | 2:33 pm GMT+7

Inland port opens in southern Vietnam province Tay Ninh, set to become border logistics hub

Inland port opens in southern Vietnam province Tay Ninh, set to become border logistics hub

The 16.5-hectare Tan Cang-Moc Bai inland port in Tay Ninh province, southern Vietnam has been opened, offering logistics services and handling customs clearance for imports and exports.

Infrastructure - Tue, October 21, 2025 | 12:03 pm GMT+7