That is the view given by experts from ACBS Securities Company's Analysis Center in a report on the prospects of upgrading the stock market.
It can be seen that upgrading the stock market is one of the major goals that the Vietnamese Government is aiming for. On September 18, 2024, the Ministry of Finance issued Circular 68/2024/TT-BTC (effective from November 2, 2024) creating a legal corridor for the "short of money transaction" product for foreign institutional investors. The newly issued Circular has many notable points, including the regulation that foreign institutional investors can trade to buy stocks without requiring sufficient money (Non Pre-funding solution - NPS).
ACBS assessed that removing the 100% margin requirement before trading for foreign investors is a key condition for Vietnam to be upgraded to a secondary emerging market by FTSE.
However, experts from the ACBS Analysis Center believe that it is too early for Vietnam to be upgraded in the FTSE Russell results announcement on October 8, 2024. Because securities companies need time to build processes and deploy this product, before FTSE surveys and collects opinions from market participants to decide whether to upgrade the Vietnamese stock market or not?
ACBS's analysis center assessed that in terms of risks in implementing short-money transactions, securities companies currently have sufficient capital capacity to apply. However, the implementation of actual short-money transaction products will also put pressure on them to build a more professional risk management system, and at the same time, they need to increase their equity capital to meet the short-money transaction needs of foreign institutional customers in the future.
ACBS expects FTSE to add Vietnam to its secondary emerging market list as early as the March 2025 review. According to ACBS, the upgrade to emerging market status will be a significant milestone for the Vietnamese stock market to be recognized as a market with investment accessibility for foreign investors.
It is expected that the proportion of Vietnamese stocks will account for about 0.7 - 0.9% of FTSE's secondary emerging market portfolio and Vietnam will attract capital flows of 500 - 600 million USD from index-simulating ETFs, not to mention capital flows from active funds.
Regarding the criteria that Vietnam "has not met" to be upgraded to MSCI's emerging market and FTSE's advanced emerging market, the analysis team found that it needs more time to resolve, including: Reducing foreign ownership limits, having a developed foreign exchange market, enhancing equal access to information and fair treatment for retail investors, and having a central clearing house (CCP).
