Stock market on the brink of transformation

Stock market on the brink of transformation

It is set to meet the criteria for an upgrade from a frontier market to an emerging market by FTSE Russell in the upcoming September review. This milestone, however, is not the end goal.

Traders work on the trading floor of Saigon - Hanoi Securities. — Photo vietnamplus.vn

Việt Nam's stock market is experiencing a significant transformation, as it is set to meet the criteria for an upgrade from a frontier market to an emerging market by FTSE Russell in the upcoming September review.

This milestone, however, is not the end goal. It serves as a catalyst for creating a more transparent, efficient market that attracts long-term investment.

According to the State Securities Commission of Vietnam, the Ministry of Finance (MoF) has successfully implemented several measures to meet the nine criteria necessary for FTSE Russell's consideration.

Among them, achieving positive feedback from foreign investors is crucial. To address previous shortcomings, the ministry has issued Circular 68/2024/TT-BTC and Circular 18/2025/TT-BTC, focusing on improving the settlement cycle and reducing costs associated with failed transactions.

Phạm Thị Thuỳ Linh, head of the SSC's Securities Market Development Department, said that new mechanisms are now operating effectively. Ten securities companies and ten custodial banks have adopted non-prefunding (NPF) practices, allowing foreign institutional investors to trade shares without needing to pre-fund their orders.

Since the KRX system began operations on May 5, over 90,000 NPF transactions have occurred, totalling more than VNĐ20 trillion (US$761.3 million). This represents a threefold increase in transaction volume and a doubling of value compared to previous periods, with NPF trades now accounting for about 50 per cent of total foreign buying activity.

The successful implementation of measures to manage failed transactions has also proven effective, with only four failures reported out of hundreds of thousands of NPF orders.

Furthermore, all listed companies have begun providing regular information in English, enhancing transparency for international investors.

After three months of operation, the KRX technology system has shown stable and secure connectivity, paving the way for a central clearing partner (CCP) mechanism, pending securities transactions, intraday trading and new derivative products, aligning the stock market with international standards.

The MoF, in collaboration with the State Bank, has also introduced Circular 03/2025/TT-NHNN, effective June 16, 2025, which simplifies procedures for opening and using accounts in Vietnamese đồng for foreign indirect investment.

The SSC has formed an Investor Advisory Group (IAG) with 33 members to address issues and enhance the experience for foreign investors. Additionally, various international investment promotion programmes are underway to attract global financial institutions.

Bùi Hoàng Hải, vice chairman of the SSC, said that international investors valued the legal framework, growth potential and liquidity of the Vietnamese market.

He emphasised that achieving an upgrade in September would be encouraging, but it would not be the final goal. It would aim to enhance market transparency and efficiency.

Deputy Minister of Finance Nguyễn Đức Chi stressed the need for the stock market to develop significantly to attract medium- and long-term capital for infrastructure and economic development.

He highlighted that identifying and resolving legal bottlenecks, along with upgrading technological infrastructure, would be essential for further progress.

Dr Chu Tuấn Linh from Hung Vuong University said that Việt Nam needed a strong restructuring of its stock market and a national strategy for capital market development for 2025-2035. This strategy should align with global trends like financial digitisation and green finance.

He also hopes to see "Personal Finance" included in high school curricula and the establishment of a reliable financial advisory ecosystem.

Phạm Lưu Hưng from SSI Research highlighted that becoming an emerging market would just be the beginning.

He stressed the importance of not only meeting FTSE Russell's criteria but also improving the national credit rating to enhance the stock market's role as a key capital source for the country's economic growth. 

Bizhub