Vietnam FTSE upgrade raises bar for capital market

Vietnam FTSE upgrade raises bar for capital market

Vietnam became a meeting point for the world’s leading financial institutions and investment organisations on September 18, as the country moved closer to FTSE Russell’s landmark market-upgrade milestone.

On September 18, SSI hosted “A Celebration - Vietnam into EM” to mark a defining moment for Vietnam’s capital market in Hanoi, gathering regulators and global market players at a landmark moment as Vietnam takes a major step towards deeper integration with international capital.

Bui Hoang Hai, vice chairman of the State Securities Commission (SSC), said FTSE Russell’s upgrade of Vietnam’s stock market marked an important milestone.

Hai said the upgrade should not be viewed as the final destination, but as a foundation for Vietnam’s capital market to enter a broader and higher-quality phase of development.

Under the SSC’s direction, the capital market needs to perform three key functions simultaneously.

First, the market must become a channel for mobilising long-term capital for businesses, supporting investment, innovation and the expansion of production and business activities. Second, it needs to create a safe, transparent and fair investment environment for domestic investors. Third, international investors must be able to access the Vietnamese market conveniently and efficiently.

“A market that operates transparently and efficiently, with effective investor-protection mechanisms, will be attractive to both domestic and international capital flows. Conversely, abundant capital will help businesses strengthen their competitiveness, expand their scale and participate more deeply in global markets,” Hai said.

Bui Hoang Hai, vice chairman of the State Securities Commission. Photo: SSI

Alongside infrastructure improvements, efforts to enhance information disclosure, settlement procedures and coordination among market institutions are expected to help Vietnam’s securities market move closer to international practices.

“Going forward, the SSC will continue to coordinate with relevant authorities and market participants to strengthen safety, transparency and efficiency. One of the key tasks is to prepare for the implementation of the central counterparty clearing mechanism, while further improving the settlement system and risk management,” Hai said. “The regulator will also continue developing infrastructure to support new products and practices in the market.”

Another area of focus is raising standards for corporate governance, information disclosure, disclosure in English and investor relations. These are important factors in strengthening investor protection, reinforcing market discipline and meeting the increasingly diverse needs of domestic and international capital flows.

Fiona Bassett, CEO of FTSE Russell, said the event was an opportunity to recognise and celebrate Vietnam’s significant achievement of being included as a Secondary Emerging Market in the FTSE Russell Global Equity Index Series from September 21.

“This milestone also reflects the remarkable progress Vietnam has made in strengthening its capital markets, enhancing market accessibility and deepening its engagement with the global capital community. It is a recognition of the country’s long-term commitment to reform, modernisation and collaboration among regulators, exchanges, market participants and investors,” Bassett said.

“At FTSE Russell, we have had the privilege of working alongside Vietnamese companies and market participants for many years. Throughout that time, we have seen first-hand the dedication, engagement and partnership that have helped make this achievement possible,” she said. “In fact, it is fair to say that Vietnam provides a model for other countries undertaking a similar journey.”

Fiona Bassett, CEO of FTSE Russell. Photo: SSI

Bassett said that while the day marked an important milestone, it was also part of a much broader story. Vietnam is becoming increasingly integrated into global capital markets and is taking on greater international importance.

“The progress achieved in recent years has helped position the Vietnamese market for greater participation in global investment markets, and that is something everyone here should be very proud of,” she said. “We are proud to have played a small role in this journey and look forward to continuing our partnership with Vietnam in the years ahead. This is a milestone that all of us will remember for a very long time.”

Duncan Burns, head of Investment Management and Global Equity, Asia-Pacific at Vanguard, said Vietnam’s market upgrade will give millions of global investors' exposure to the country’s future through their diversified portfolios.

“What has impressed me most during my week-long stay in Vietnam is the strong local focus. History suggests that inclusion in major benchmarks often brings greater visibility, broader investment participation, improved access to capital and greater financial support,” said Burns.

“Domestically, these outcomes will help support the objectives of the SSC. The common theme is that greater access to capital and future growth will create new opportunities for investors in a safer, more transparent and more reliable environment, while supporting Vietnam’s continued development.”

Burns expressed Vanguard’s sincere appreciation to everyone who contributed to this achievement, including the SSC, the Ministry of Finance, the Vietnam Securities Depository and Clearing Corporation, the Vietnam Exchange, SSI and other local brokers, custodian banks, and, of course, its partners at FTSE Russell.

“Progress of this kind does not happen because of a single decision or a single action. It is the result of years of hard work and collaboration across institutions united by a common objective. Today is a celebration of those efforts,” he said. “We are excited about what comes next for Vietnam and are proud to be a long-term partner in your investment community.”

SSI CEO Nguyen Duc Thong. Photo: SSI

SSI CEO Nguyen Duc Thong offered a different perspective on the market-upgrade milestone. He noted that Vietnam had spent eight years on FTSE Russell’s watchlist. Looking further back, Vietnam’s stock market began in 2000 with just two listed companies.

“What excites us most is not simply the name or status, but what comes with it. That means deeper liquidity, higher standards and, most importantly, a new pool of investors with higher expectations,” he said. “The details of these higher expectations also highlight another side of the upgrade. Vietnam’s entry into a new market category could broaden access to global institutional investors, but at the same time, the market, listed companies and securities firms themselves will have to adapt to higher requirements for service quality, transparency, governance and infrastructure.”

VIR