WB estimates $25 bln foreign investment after Vietnam stock market upgrade

Vietnam’s stock market status upgrade from “frontier” to “emerging” by global index providers FTSE Russell and MSCI can attract international investments of $25 billion by 2030, the World Bank estimates.

Andrea Coppola, World Bank lead economist and program leader for Vietnam, mentioned the estimate Tuesday at a conference on “Solutions for upgrading the Vietnam stock market,” hosted by the Ministry of Finance.

However, for the upgrade to happen, Vietnam must revise its foreign ownership limit (FOL) terms and other conditions, he added.

Nguyen Hoai Thu, managing director and head of investment at VinaCapital, a leading investment fund in Vietnam, also said the removal of pre-funding terms for foreign investors was a prerequisite for FTSE Russel to upgrade Vietnam’s stock market status.

Recently, the Ministry of Finance has completed a draft circular to remove several bottlenecks related to pre-funding terms, Hoai noted. Once the update is issued and implemented, FTSE Russel would soon issue an official decision, she added.

Nguyen Nhu Quynh, head of the National Institute for Finance, under the finance ministry, said the stock market was an important medium and long term capital mobilization source for Vietnam.

As of end March, the nation’s stock market had a capitalization of VND6,800 trillion ($268.9 billion), up 13.9% from end-2023. This was equivalent to 66.2% of the country’s 2023 GDP.

Vietnam’s benchmark VN-Index closed Tuesday down 0.93 points, or 0.08%, to 1,215.68.

On April 11, State Securities Commission (SSC) chairwoman Vu Thi Chan Phuong met with representatives from rating organizations FTSE Russell and Morgan Stanley to discuss Vietnam’s stock market status upgrade.

The represenatives said their major customers had given positive feedback and highly valued the determination and efforts of the Vietnamese government and stock market regulator towards getting the nation’s stock mark status upgraded from “frontier” to “emerging.”

A day later, SSC chairwoman Phuong met with a delegation from rating agency Standard & Poor’s Global Ratings (S&P). The S&P delegation said it was willing to work with the SSC in growing the corporate bond market in Vietnam