When will Vietnam’s stock market be upgraded?

Rong Viet Securities (VDSC) and Mirae Asset believe that MSCI may upgrade Vietnam’s stock market to an emerging market in 2022-2023, while BSC thinks the upgrade would be prior to 2025 at the earliest.

In the latest review in mid-2019, Morgan Stanley Capital International (MSCI) still had not added Vietnam to the watchlist for upgrading from frontier to emerging market, though Vietnam could satisfy all quantitative criteria, including market scale, capitalization value and number of listed companies with capitalization value of $1 billion.

When will Vietnam’s stock market be upgraded?



FTSE also did not upgrade Vietnam into a secondary emerging market in the review some days later because of e'problems in offset payment and transaction registration procedures applied to foreign investors.

The latest move that observers believe would have a big impact on the market and remove th''barriers to the market upgrading is the enactment of the new Securities Law in late November 2019 which will take effect in early 2021.

The law had new provisions that aim to protect investors’ benefits by requiring high quality of finance reports and information exposure. The new law also gives more rights to the State Securities Commission (SSC) in examining, supervising and treatment violations related to securities trading activities.

MSCI may add Kuwait to the MSCI Emerging Markets Index in mid-2020. If so, the proportion of Vietnam’s stock in MSCI Frontier Markets Index and MSCI Frontier Markets 100 Index may rise to 25.8 percent and 30 percent, respectively.

“We hope that the changes in the law will help improve the quality of stocks, increase transparency and better protect the benefits of investors, especially small investors,” the report of VN Direct Securities (VNDS) reads.

 


VNDS analysts think that Vietnam’s stock market may get an upgrading in the next 2 or 3 years. In the best scenario, MSCI would add Vietnam to the watchlist for upgrading in the annual review in June 2021 and would give an official upgrading one year later.

VDSC, also citing the existing problems of the market and emphasizing that MSCI needs some more time to assess the enforcement of the new Securities Law, believes that Vietnam is not likely to get the upgrade before 2022.

Sharing the same view, Mirae Asset Vietnam (MAS) said Vietnam would have to wait until mid-2022. In the worst scenario, the upgrading would be given after 2023.

Meanwhile, BIDV Securities (BSC) is even more cautious when predicting the time for upgrading. It thinks that FTSE may announce the upgrading in 2020 at the soonest, while MSCI would do that ‘prior to 2025’.

Experts believe that even if Vietnam doesn’t get the upgrade this year, it would still get benefits from the upgrading of other markets.

MSCI may add Kuwait to the MSCI Emerging Markets Index in mid-2020. If so, the proportion of Vietnam’s stock in MSCI Frontier Markets Index and MSCI Frontier Markets 100 Index may rise to 25.8 percent and 30 percent, respectively.

Mai Chi 

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