FTSE Russell to keep Việt Nam on upgrade watchlist for emerging markets

FTSE Russell to keep Việt Nam on upgrade watchlist for emerging markets

FTSE Russell said that Việt Nam currently falls short in the areas of delivery versus payment (DvP) and costs associated with failed trades. Both of these criteria have been rated as 'restricted'.

Two investors on a trading floor of a securities firm. — VNA/VNS Photo

FTSE Russell, a leading global index provider, has announced its decision to maintain Việt Nam on its watchlist for potential upgrade from a frontier market to a secondary emerging market. 

This classification is crucial for investors as it signals the country's growing economic significance and investment potential.

The country has been on FTSE Russell's upgrade watchlist since September 2018, reflecting the market's evolving landscape.

Despite its prime position, the country has yet to meet certain key criteria essential for advancement. 

FTSE Russell said that Việt Nam currently falls short in the areas of delivery versus payment (DvP) and costs associated with failed trades. Both of these criteria have been rated as 'restricted'.

In a notable development aiming to enhance the market, regulatory authorities in Việt Nam has implemented a non pre-funding (NPF) model starting November 2024. This approach allows domestic securities firms to provide adequate funding to foreign institutional investors to support their securities purchases. 

FTSE Russell is closely monitoring these changes and seeking feedback from market participants regarding the NPF model and management of failed transactions.

Moreover, it is essential for Việt Nam to streamline its account registration processes. Current regulations can lead to extended timeframes for new account setups, which may deter potential foreign investors. 

Establishing an efficient mechanism for transactions involving securities that have reached or are approaching the foreign ownership limit (FOL) is also deemed critical for fostering foreign participation.

FTSE Russell has acknowledged the ongoing commitment of Vietnamese market authorities to undertake various regulatory reforms. These reforms are intended to enhance international investor participation in the Vietnamese stock market, including upgrading trading platforms to meet global standards.

According to the rating firm, its next update is scheduled for September 2025, which will determine Việt Nam's position on the upgrade watchlist. 

Bizhub