The HCMC Stock Exchange

Vietnamese investors were excited with the news that FTSE Russell has added Vietnam’s stock market to its reconsideration watchlist. 

The move, announced in its 2018 Annual Country Classification Review released on September 26, indicates that the stock market upgrade is expected soon.

Bao Viet Securities commented that the news has had positive influence on investors’ decisions in recent trading sessions.

Meanwhile, some analysts warn that the presence of Vietnam on FTSE’s review list does not mean that Vietnam will get the upgrade.

Vietnam, like any other markets, will have to satisfy nine criteria. And even if it can satisfy all the criteria, it will still be on the watchlist for at least one year. As such, Vietnamese investors should not expect the upgrading to come prior to September 2019.

China, for example, was added to FTSE’s watchlist in March 2018, but it will only get the official upgrading in June 2019. The same thing occurred with Iceland, which will be upgraded in September 2019.

Nevertheless, experts all affirmed that the upgrade for Vietnam is feasible.

The government is working on the amendment of the Securities Law with an aim to help obtain the upgrade from MSCI and FTSE.

It is expected that the draft law would be submitted to the National Assembly for discussion in the upcoming session in October before it is ratified in May 2019.

“The recognition by a prestigious institution like FTSE Russel will help upgrade the national financial market in the public and investors’ eyes, and have a positive impact on foreign capital attraction,” the HCMC Stock Exchange (HOSE) stated.

“It will also help improve market liquidity, and listed companies’ quality. It it is the driving force for Vietnam to build up a legal framework on the stock market,” it said.

Huynh Anh Tuan, deputy CEO of Everest Securities, told the local press that the upgrade for Vietnam will happen, sooner or later.

Tuan said foreign capital, estimated at tens of billions of dollars, will flow to Vietnam soon after Vietnam gets the upgrade.

He predicted that Vietnam is likely to get the upgrade by 2020, and that if the conditions for the upgrade mature, cash will flow to the market six months or one year in advance.

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