Stock market upgrade expected by September

Stock market upgrade expected by September

The Ministry of Finance (MoF) is actively implementing a comprehensive plan to enhance market capabilities and meet the stringent criteria set by international rating agencies such as FTSE Russell and MSCI.

An investor watches market movements on his screens. — Photo vietnamplus.vn

Việt Nam's stock market is on the brink of a significant transformation, with expectations mounting for an upgrade to emerging market status by September. 

This ambitious goal was emphasised at the regular government press conference on Tuesday by Deputy Finance Minister Trần Quốc Phương, who noted that the Government is committed to achieving this milestone through a series of strategic initiatives.

The Ministry of Finance (MoF) is actively implementing a comprehensive plan to enhance market capabilities and meet the stringent criteria set by international rating agencies such as FTSE Russell and MSCI. 

While Việt Nam has largely satisfied the necessary technical criteria, challenges remain in gaining the confidence of foreign investors and ensuring a transparent and accessible investment environment.

"However, this is merely a necessary condition. The sufficient condition hinges on the remaining processes and foreign investors' assessments of investment activities within the Vietnamese stock market," Phương said.

To address these challenges, the ministry has outlined six major strategic actions aimed at bolstering investor trust and facilitating the upgrade process. 

Key among these initiatives is the effective deployment of the KRX system, a new technology platform designed to improve trading efficiency and risk management for foreign investors. This system introduces advanced features for transaction processing and payment, streamlining the investment process.

Additionally, recent regulatory changes, including Circular 68/2024/TT-BTC, have removed significant barriers by allowing foreign institutional investors to place buy orders without requiring full upfront funds. This reform is anticipated to enhance investment fluidity and attract more foreign capital.

The MoF is also reviewing and amending Decree 155 to clarify the timelines for public companies to report their foreign ownership limits, thereby increasing transparency for market participants. Simplifying the procedures for opening indirect investment accounts is another focus, with the Ministry collaborating with the State Bank of Việt Nam (SBV) to facilitate foreign capital inflows.

Furthermore, the introduction of omnibus trading accounts for foreign funds is set to simplify transaction processes, allowing fund managers to execute trades on behalf of multiple portfolios simultaneously. This innovation aims to enhance operational efficiency for foreign institutional investors.

In addition to regulatory reforms, the ministry is focused on increasing the supply of financial products and improving the listing process for companies after their IPOs. Developing new investment indices will also provide more benchmarks for fund managers, further enriching the investment landscape.

To ensure ongoing dialogue between regulators and market participants, a policy dialogue group will be established, comprising representatives from the State Securities Commission, investment funds, and securities firms. 

This group will facilitate timely discussions on market needs and regulatory responses, a step many experts believe is crucial to making policy more responsive.

Despite the progress made, Việt Nam's path to achieving emerging market status is fraught with challenges. FTSE Russell's recent report classified Việt Nam as a frontier market, citing concerns about payment systems and market accessibility. 

However, the introduction of non-pre-funding models for foreign investors has been recognised as a positive development, indicating that improvements are underway.

The Government's determination to elevate Việt Nam's stock market is evident, with clear political will demonstrated in various regulatory meetings. As the September deadline approaches, the financial community is hopeful that these efforts will culminate in a successful upgrade, positioning Việt Nam as a premier investment destination in the region. 

Bizhub