Officially untie the “pre-funding” knot
The Ministry of Finance has approved Circular 68/2024/TT-BTC amending and supplementing a number of articles of the Circulars regulating securities transactions on the securities trading system; clearing and settlement of securities transactions; activities of securities companies and information disclosure on the securities market, effective from November 2, 2024.
The newly issued Circular has many notable points, including the regulation that foreign institutional investors can trade to buy shares without requiring sufficient funds (Non Pre-funding solution - NPS).
Accordingly, foreign institutional investors purchase securities on the same day (T+0) and pay on the following days (T+1/T+2). Securities companies shall assess the payment risk of foreign investors to determine the amount of money required when placing an order to buy shares (if any) according to the agreement between the securities company and the foreign investor or the authorized representative of the foreign investor.
Regarding the securities companies will provide payment support for foreign institutional investors.
From the perspective of securities companies, Mr. Nguyen Khac Hai - Director of Legal and Compliance Control, SSI Securities Company said that it is inevitable that securities companies must prepare large capital resources to limit payment risks. Second, the risk management system of securities companies must be upgraded to limit payment risks and operational risks.
Regarding the provisions on information disclosure, similar to the previous Draft, Circular 68 stipulates that listed organizations and large-scale public companies will periodically disclose information in English from January 1, 2025. Subsequently, listed organizations and large-scale public companies will additionally disclose extraordinary information, information upon request, and disclose information on other activities of the public company in English from January 1, 2026. This provision aims to ensure equal access to investment activities of foreign investors.
Activating billion-dollar capital flow
According to SSI Research's assessment, this unit maintains the forecast scenario that Vietnam's stock market will be upgraded in the September 2025 assessment period.
SSI experts said: "Currently, units including the Vietnam Securities Depository and Clearing Corporation (VSDC), securities companies, custodian banks and investors are working to complete the paperwork process. With the upgrade to emerging market status, according to preliminary estimates, capital flows from ETFs could reach up to 1.7 billion USD, not including capital flows from active funds. FTSE Russell estimates that total assets from active funds are 5 times higher than those from ETFs.
Ms. Le Thi Le Hang - Strategy Director of SSI Securities Corporation commented that in the most favorable scenario, Vietnam will be upgraded by FTSE around September 2025 and will be included in the emerging market index basket in March 2026. Being upgraded by FTSE will be a premise for MSCI to upgrade the market later. Although we cannot expect the cash flow to flow in immediately, the cash flow will flow in more later.
Sharing the same view, Mr. Huynh Minh Tuan - Chairman of FIDT Joint Stock Company - said that the issuance of Circular 68 is very good for the Vietnamese stock market. When the market is officially "upgraded", it will create a lot of buzz, as well as the attention of the regional and international financial community.
Mr. Tuan predicts that FTSE will likely officially announce the upgrade of Vietnam's stock market to emerging market category 2 during this review period, effective after 1 year, that is, September 2025.
However, the expert believes that capital attraction must always be based on the market foundation, attractive valuation and profit growth.Therefore, this may only create a short-term effect, while the continuing story will be the change in profit quality and increased goods for the market.
Regarding this issue, Mirae Asset experts predict that after being upgraded, Vietnam can attract cash flows from large funds, such as Vanguard FTSE Emerging Markets ETF.
"Foreign money flowing into Vietnam comes not only from funds using the FTSE Emerging Markets Index as a reference, but also from other funds when the market is upgraded," Mirae Asset emphasized.
Synthesizing a number of ETF funds using the FTSE Emerging Markets Index as a reference, with an allocation ratio of 0.6%, Mirae Asset estimates that Vietnam can receive investment of about 516 million USD (nearly 12,500 billion VND).
Some stocks that are expected to attract foreign capital when the Vietnamese stock market is upgraded to an emerging market include stocks of many large-capitalization enterprises such as Vinamilk, Vinhomes, Vingroup, Hoa Phat... These are all enterprises with capitalization of billions of USD and early focus on governance quality.
