At least $1.2 billion will flow into the market

According to Bao Viet Securities’ (BVSC) analysts, 28 ETF funds are making passive investments based on FTSE Emerging Markets indexes, with total capitalization value of up to $76.4 billion. 

The biggest ETF fund is Vanguard FTSE Emerging Markets with capitalization value of $61.19 billion.

BVSC predicted that if Vietnam is upgraded by FTSE to secondary emerging market by March 2020, after the amended Securities Law is ratified by the National Assembly, at least $375.34 million worth of passive investments will be injected into the market from ETF once ETF restructures its portfolios after March 2020.

There are four criteria to satisfy listing in FTSE Emerging Markets Index, namely capitalization value, liquidity, foreign ownership ratio and transferable stock ratio.

BVSC, referring to the criteria, has named eight shares which can satisfy the requirements. They include VIC, VHM, VNM, VCB, SAB, VJC, VRE and BVH, which may account for 0.02-0.11 percent of FTSE’s stock portfolio.

A securities expert noted that it would be more difficult to obtain market upgrading from MSCI than FTSE. This is explained by the fact that MSCI classifies markets into four levels: developed, emerging, frontier and standalone. FTSE has five levels: developed, advanced emerging, secondary emerging, frontier and standalone.

The expert cited reports as saying that MSCI would upgrade Vietnam no sooner than 2020.

BVSC estimates that there are 94 ETF funds making passive investments based on MSCI Emerging Markets with total market capitalization value of $200.26 billion. iShare Core Emerging Markets is the biggest ETF with capitalization value of $57.73 billion.

After the upgrading by MSCI, Vietnam can expect $857.76 million worth of passive investment capital.

The shares likely to be added to the MSCI Emerging Markets Index, predicted by BVSC, are those from VIC, VHM, VNM, VCB, VRE and BVH.

As such, at least $1.2 billion worth of passive investment capital would flow to Vietnam once the market is upgraded from both FTSE and MSCI. 

Vietnam has showed its strong determination to amend the laws and improve the market conditions to obtain the upgrade soon.

Deputy PM Vuong Dinh Hue said at an event in late February that by 2020, the stock market value would be equal to 100 percent of GDP, and that 3 percent of the population would be securities investors.

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