VietNamNet Bridge - Vietnam should try to improve its stock market to make it more attractive to investors, rather than wait for a higher ranking, experts have said. 

Many Vietnamese investors were disappointed when MSCI did not include Vietnam in the MSCI review list for a potential reclassification to Emerging Markets status. 

Despite new record highs of the VN Index recently and improvements in legal framework, Vietnam is still ranked as a frontier market.

Le Hai Tra, vice president of the HCMC Stock Exchange, commented that MSCI imposed unilateral arguments and requirements on the Vietnamese market. 

Many Vietnamese investors were disappointed when MSCI did not include Vietnam in the MSCI review list for a potential reclassification to Emerging Markets status.

He said even in developed markets like Japan, companies such as Japan Airlines and Fuji Media still sets limits on foreign ownership ratios.

If a company operates well and investors rush to pour money into it in accordance with the benchmarking effect, there will be no room left. 

The most important factor is that Vietnam has enough companies with large scale and high liquidity that can satisfy MSCI’s requirements. 

There are still limits on foreign ownership ratios in some special business fields, such as banking, but the limits won’t affect their benefits.

Nguyen Duy Hung, president of the Saigon Securities Incorporated (SSI), said what Vietnam stock market needs to strive for is winning investors’ confidence. 

Only by doing so will it be able to serve as the key capital mobilization channel for the national economy.

Hung said with the current conditions, it would not be a good thing if Vietnam stock market receives emerging status. 

Vietnam’s goal is to have its stock market status upgraded into emerging in the next MSCI review, and in order to obtain this, it is necessary to quickly improve the market to satisfy the requirements set by MSCI. 

By that time, Vietnam stock market’s position and the national credit rating will be improved.

However, Hung believes the frontier market status won’t  have negative impact on the market in the short term. If Vietnam was upgraded into ‘emerging’, its proportion in emerging basket would be small. Vietnam would be mentioned more if it remains a frontier market.

Phan Dung Khanh, consultancy director of Maybank KimEng Securities, said some investors may consider the upgrading for Vietnam only after 2018. 

Reports all show that foreign investors poured big amounts of money into the stock market in the first half of 2017. They bought 1.47 billion shares worth VND58.805 trillion and sold 1.48 billion worth VND49.746 trillion.

US$1=VND22,000

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