Stock market enters crucial growth phase

Stock market enters crucial growth phase

The stock market outlook for March is paving the way for sustainable growth, supported by key factors such as the anticipated market upgrade, favourable economic policies, and progress in system implementation.

A market upgrade could be possible later this year, photo Le Toan

On March 10, FTSE Russell announced that it would release the results of its mid-term national market classification review for Vietnam after the US market closes on April 8.

Minister of Finance Nguyen Van Thang also said that the resolutions from the plenary meeting of the Asia-Pacific Regional Committee (APRC) in late February, coupled with the prospect of market upgrade and robust economic growth, were expected to be key drivers for Vietnam’s stock market to enter a phase of deeper global integration.

“With a minimum GDP growth target of 8 per cent this year, the government will continue to strengthen policies supporting businesses, improve the investment environment, and enhance market governance standards to realise this goal,” Thang said. “The securities legal framework is also being refined, particularly with the revised Securities Law and related guiding documents, to create additional refinements for investors.”

Vietnam is currently one of two markets on FTSE Russell’s watch list for a potential upgrade.

“The outlook for Vietnam’s stock market upgrade to emerging market status this year is very positive. The Vietnam Securities Depository and Clearing Corporation (VSDC) expects FTSE Russell to positively assess the solutions implemented in the March review, making the possibility of an upgrade in September highly feasible, in line with investor expectations,” said Ta Thanh Binh, general director at the VSDC.

The VSDC is upgrading its electronic communication gateway, allowing securities firms and custodian banks to exchange foreign investor transaction data quickly and securely, replacing the current manual processes. This system is expected to be completed imminently, Binh added.

As part of the market upgrade efforts, on March 11, the Ho Chi Minh Stock Exchange announced a plan to test its new IT system, the KRX. The testing period is to run from March 17 to April 11, simulating stock trading operations as on a regular trading day.

“The expected rollout of the KRX system between late May and June is anticipated to improve market infrastructure and investor sentiment. The system has passed the national cybersecurity assessment, and broker-level testing is set to begin,” said Dao Minh Chau, associate director at SSI Research.

Although Vietnam has met key technical requirements, Chau said practical issues remain, including varied settlement cycles and inconsistencies in credit limits. Nonetheless, the State Securities Commission (SSC) is actively addressing these challenges in collaboration with international financial institutions.

On the same day, the SSC also announced plans to implement nine initiatives in 2025 to support the market upgrade, including operation of the KRX system and seven objectives targeted for completion before Q3.

The ultimate goal is to launch a central counterparty clearing (CCP) mechanism for Vietnam’s stock market, which the VSDC has committed to completing in 2026.

“The non-prefunding solution, which allows foreign investors to trade in accordance with FTSE’s criteria, is just an initial step. In the long-term vision for meeting MSCI’s upgrade requirements, implementing the CCP settlement mechanism will be a more crucial and strategic move,” said a VSDC representative.

The revised Securities Law, enacted late last year, has established the legal framework for the VSDC to set up a subsidiary to implement this CCP mechanism in line with international standards, and it is working intensively to execute this plan on schedule, the representative added.

By the end of the trading session on March 12, Vietnam’s stock market saw the VN-Index register its fifth consecutive positive session. Analysts at Vietnam Construction Securities forecast that upward momentum remains dominant, with no clear signals of a reversal. The VN-Index is expected to rise, aiming for a resistance level of 1,360-1,365 points.

Nguyen Duc Hoan, CEO of ACB Securities, emphasised that historical trends in regional markets show that before an official upgrade, stock markets often experience strong growth phases.

“This year is considered a crucial period for investors to accumulate shares in companies with significant potential,” he said. “However, the market also faces considerable challenges, particularly from global economic fluctuations. Trade conflicts, the risk of returning inflation, and the US Federal Reserve’s interest rate policies could all exert pressure on investment capital flows.”

At the APRC 2025 conference of the International Organisation of Securities Commissions (IOSCO), Vietnam became a signatory to a multilateral MoU on supervision of APRC. This marks a significant step in strengthening market oversight cooperation between Vietnam’s SSC and other securities regulatory bodies within APRC and IOSCO.

VIR