Vietnam stock market may receive $9 bln from overseas funds once upgraded: Morgan Stanley

International funds may pour up to $9 billion into Vietnamese equities once Vietnam’s stock market status is upgraded from a frontier to an emerging market, says a Morgan Stanley representative.

In case Vietnam achieves the upgrade, passive funds tracking FTSE indexes will likely invest $800 million and funds tracking non-FTSE indexes may pour $2 billion, said Young Lee, managing director, chief operating officer of IED Asia-Pacific, Morgan Stanley, said at a working session with the State Securities Commission (SSC) in Hanoi on Monday.

In addition, active funds may invest an additional $4-6 billion in Vietnam’s stock market, Lee added.

SSC chairwoman Vu Thi Chan Phuong shared that the Ministry of Finance’s Circular 68/2024/TT-BTC, dated September 18, 2024, took effect on Monday. The regulation removes the pre-funding requirements for foreign investors and stipulates clearing and other operations of securities companies.

Lee said the circular helps Vietnam’s stock market align with FTSE Russell’s requirements. He applauded the swift removal of the pre-funding requirement.

For her part, Wanming Du, head of index policy, APAC, FTSE Russell, also hailed the Vietnamese regulators’ new steps designed to improve the local stock market since her last working visit in April.

She affirmed that FTSE Russell will increase interactions with stakeholders in Vietnam to support foreign traders and share information on the trading practices of FTSE Russell’s clients in emerging markets.

In its latest review last month, FTSE Russel, a London-based global equity index, retained Vietnam on its watch list for possible reclassification to “secondary emerging” market status.

Vietnam was added to the watch list in September 2018 for a possible upgrade from the current “frontier” market status.

The Vietnamese government is striving to have the local stock market status upgraded by both FTSE Russell and New York-based MSCI next year.

Once the upgrade is recognized by both FTSE Russell and MSCI, Vietnam is estimated to attract international investments of up to $25 billion in its stock market, the World Bank said earlier this year.