Vietnam pushes for market upgrade to attract long-term capital flows

Vietnam pushes for market upgrade to attract long-term capital flows

An upgrade to Vietnam's stock market status from frontier to emerging would improve the country's image and attract long-term capital flows, raise market standards, and promote institutional reforms.

On July 30, Lao Dong newspaper, in coordination with the Ministry of Finance (MoF), organised a seminar titled “Upgrading the stock market, expanding capital mobilisation channels for the economy”.

Bui Hoang Hai, vice chairman of SSC

This event took place with the potential for Vietnam’s stock market to be upgraded soon. FTSE Russell will announce the results of its market review for Vietnam in September. This strategically significant step would open the door to large-scale, stable, and long-term international investment.

At the seminar, Bui Hoang Hai, vice chairman of the State Securities Commission (SSC), affirmed Vietnam’s determination to implement solutions to upgrade the stock market. After 25 years of development, Vietnam’s stock market has made remarkable progress and narrowed the gap with regional markets.

Currently, over 10 million investor accounts are active on the market. Vietnam’s stock market liquidity is the highest trading volume in the region, exceeding even markets with 70 to 100 years of development. The number of investor accounts has increased from 3,000 in 2000 to over 10 million now, affirming growing public participation in the financial market. In recent years, the bond market has also grown impressively with total value of VND2.503 quadrillion ($100 billion), equivalent to 21.7 per cent of 2024 GDP.

"These figures reflect that the Vietnamese stock market has developed robustly, not only as a popular investment channel but also as an increasingly effective medium- and long-term capital mobilisation tool for the economy, in addition to the role of the banking system," Hai emphasised.

"For that reason, the market upgrade is not just about improving national image, but also about attracting long-term investment capital, raising standards, and pushing forward institutional reforms," he added.

For upgrading the market, the MoF and the SSC have been reviewing and proposing amendments to legal documents to address obstacles and meet international criteria, as well as coordinating with other ministries and agencies to effectively implement solutions for the market upgrade.

Pham Thi Thuy Linh, head of the SSC's Market Development Department, stated that the SSC is actively implementing measures to facilitate the participation of foreign institutional investors in Vietnam’s stock market.

Regarding the legal and policy framework, to improve the two criteria that Vietnam was found not to meet last September in a FTSE Russell assessment, including the delivery versus payment settlement cycle, and settlement and costs related to failed trades. The MoF issued Circular No.68/2024/TT-BTC, followed by Circular No.18/2025/TT-BTC to address them.

Detailing the second criterion regarding mechanisms to handle failed trades, Linh noted that these mechanisms have proven effective. "To date, hundreds of thousands of non-pre-funded orders by foreign institutional investors have been handled safely and efficiently under the new circulars," she highlighted.

Furthermore, Circular No. 68/2024/TT-BTC mandates simultaneous disclosure of information in both Vietnamese and English for listed and public companies. Linh said that listed companies are now regularly publishing disclosures in English.

The SSC has already established an advisory dialogue group on capital market development to accelerate the upgrade process. The group consists of 33 members, divided into three working groups focused on market and post-trade development. “We frequently conduct direct discussions between regulators, market members, and expert groups to capture real experiences and challenges investors face when participating in the Vietnamese market,” she said.

Additionally, the SSC is working closely with the State Bank of Vietnam in developing Circular No.03/2025/TT-NHNN, which replaced Circular No.05/2014/TT-NHNN, to amend some contents related to opening and using VND accounts to carry out foreign indirect investment in the Vietnamese securities market. This new regulation, effective since June, simplifies procedures and facilitates foreign indirect investment activities in the Vietnamese stock market, another crucial step in attracting international investors.

VIR