VietNamNet Bridge - The Vietnamese stock market has been listed by Morgan Stanley Capital International (MSCI) as a frontier market. Will it be upgraded into an emerging market in three or five years?

Vietnam’s decision to lift the ceiling foreign ownership ratio in Vietnamese enterprises to 100 percent has pleased international investors. MSCI has recommended upgrading the Vietnamese market into an emerging market.

Experts once again heard at the conference ‘Vietnamese stock market on the way to emerging markets’ held recently by the HCMC Stock Exchange (HOSE) and StoxPlus that the Government of Vietnam is striving to turn the stock market into a key channel for mobilizing medium- and long-term capital in the national economy. 

Therefore, the stock market upgrade will be necessary to attract investment capital.

There are two important things that need to be done to speed up the upgrade process – lift the ceiling foreign ownership ratio and make the market information transparent. Of these, the former has been done.

Hoang Thi Hoa, deputy director of Dragon Capital, commenting that the government wants to see the stock market upgraded as soon as possible, said three years was an ideal period to do this. 

Vietnam’s decision to lift the ceiling foreign ownership ratio in Vietnamese enterprises to 100 percent has pleased international investors. MSCI has recommended upgrading the Vietnamese market into an emerging market.

Sharing the same view with Hoa, Pham Minh Huong, chair of VNDirect Securities, commented the new policies laid down by the government can show its strong determination to upgrade the stock market, but Vietnam will need 3-5 more years to become an emerging market.

Meanwhile, Tran Anh Dao, deputy general director of HOSE, has questioned if three years is a reasonable time, stressing that the upgrading would require great efforts not only from management agencies but from market members as well.

Rick Chau from MSCI Inc said it was difficult to say how much time Vietnam needs to become an emerging market. The news about the Pakistani stock market showed that a lot of things had to be done for the upgrade, and many things depended on local management agencies.

Sani-e-Mehmood Khan, general director of the Pakistani Stock Exchange, said in the six years of implementing the upgrade, Pakistan invited many international experts, who, together with Pakistani Minister of Finance, chairs and CEOs of securities companies, meet to find the best solutions. 

The Decree 60 to lift the ceiling foreign ownership ratio to 100 percent took effect one year ago, but to date, only 25 businesses have registered to lift the ceiling ratios.

Ta Thanh Binh from SSC commented that not all businesses want to lift the ceiling, while foreign investors are choosy and don’t invest in all businesses.

Binh also attributes this to the difficulties foreign investors have when accessing business information, because many listed companies still have not released financial reports in English.