Lao Dong Newspaper had an interview with Mr. Dinh Minh Tri - Director of Personal Customer Analysis, Mirae Asset Securities Joint Stock Company (Vietnam) - about attracting foreign capital and the position of the Vietnamese stock market in the global capital market system.
FTSE Russell is completing the review steps before announcing the upgrade results, how do you assess the readiness of the Vietnamese stock market today?
- I think the Vietnamese stock market is at the highest level of readiness ever.
Overall, I assess Vietnam's reform speed in the past 18 months as impressive, especially when compared to the progress of the 2018-2023 period. More importantly, the policy is clear: The Government, the Ministry of Finance and the SSC are racing to complete the market ecosystem before the capital flow actually comes.
How will FTSE's announcement of upgrading to the secondary emerging market, expected to take effect from September 2026, affect the market and investment capital flow?
- Regarding the impact of capital flows, it is necessary to distinguish between two separate flows. Passive capital flows will enter first and quite certainly, FTSE Emerging Markets index tracking ETFs will buy Vietnamese stocks on the portfolio restructuring day. With being included in FTSE's emerging market indices, Vietnam will have access to capital from global investment funds tracking these indices. Currently, there are about 28 stock codes identified as likely to enter the FTSE Emerging basket, of which large-cap groups such as HPG, VCB, VIC, VHM will be the focus.
Active capital flows will come slower and depend heavily on CCPs. Large-scale hedge funds and active funds need short selling, derivative trading and reliable clearing systems before allocating significant capital. This is why many organizations place expectations on the 2027-2028 period instead of immediately after upgrades.
Regarding market impact, upgrades will create two important effects. The first is the revaluation effect: Vietnam's market P/E ratio is currently at about 15-16 times (market valuation compared to business profits), significantly lower than emerging markets equivalent to Indonesia (17-19 times), Philippines (16-18 times). When Vietnam is ranked in the same group, institutional investors tend to raise the target P/E ratio, creating a natural price increase pressure.
The second is the reform effect, the need to maintain emerging market criteria creates continuous pressure forcing Vietnam to continue to improve governance, transparency and market infrastructure, a positive feedback loop that is no less valuable than direct cash flow.
For international institutional investors, what factors are the biggest barriers to accessing the Vietnamese stock market?
- Contacting many foreign institutional investors, I have noticed that they often raise three issues in a clear order of priority.
The first and most important thing is the lack of CCPs and short selling. Without CCPs, there is no third party guaranteeing payment - partner risk is currently placed on the shoulders of securities companies, which international funds cannot accept on a large scale.
Second is information transparency and corporate governance. Decree 245 is considered a breakthrough in improving market transparency to promote the goal of upgrading the Vietnamese stock market. However, in reality, only about 25-30% of listed companies fully disclose information in English. Foreign institutional investors cannot analyze businesses just through Vietnamese reports and information delays create a large asymmetry between them and domestic investors.
Third is to limit foreign room. Many leading enterprises such as MBB, VCB, CTG, BID are still out of foreign room or room is still very limited, making funds wanting to access the banking industry, a sector accounting for about 35% of market capitalization, unable to buy more.
In the long term, to approach MSCI's criteria, what issues should Vietnam prioritize reforming in the coming time?
- Vietnam is aiming to be included in MSCI's tracking list in the 2026-2027 period. To realize this goal, whether being included in the upgrade tracking list or officially upgraded, priority must be given to completing and operating CCPs on schedule. This is not only a condition for MSCI but also a platform to activate more complex derivative products, short selling and intraday trading, the entire ecosystem that emerging markets need to have. The 2027 roadmap needs to be implemented correctly, not to slip into 2028.
In addition, it is necessary to improve corporate governance and information disclosure standards. Upgrading the Vietnamese stock market is an important breakthrough in the process of international financial integration, but true integration requires not only technical infrastructure but also governance standards. It is necessary to require 100% of listed companies on VN30 and HOSE to publish financial statements, shareholders' meeting documents and key information in English simultaneously with Vietnamese, without exceptions and with strong enough sanctions. At the same time, applying IFRS standards to all large-cap enterprises according to the 2025-2030 roadmap being built by the SSC is a step that needs to be accelerated.
There needs to be a strong enough domestic institutional investor force to play an absorbing and stable role. Currently, the total managed assets of domestic investment funds only reach about 5-6% of GDP, very low compared to 15-25% in emerging markets. There needs to be stronger incentive policies for insurance, pension funds and domestic mutual funds to invest in stocks.
In summary, the road to MSCI is not a straight line, but with the current pace of reform, I believe Vietnam has enough conditions to be included in the MSCI monitoring list in the 2027-2028 period and officially upgraded in 2029-2030.
