Illustrative image (Photo: VNA)A top priority set for Vietnam’s stock market is to get upgraded to emergingstatus before 2025, according to market credit rating agencies Morgan StanleyCapital International (MSCI) and the FTSE (Financial Times Stock Exchange).
There are still many criteria that the Vietnamese market must reach to meet theupgrade requirements, including strengthening the safeguarding of the interestsof retail investors. The recent actions of the market regulator to handleviolations on the stock market, which are highly appreciated by international investors,may add more points in the coming reviews of international market rankingorganisations.
At the end of last year, VNDiret Securities Company said that if Vietnam completesthe new securities trading system in early 2022, it could be included in theMSCI’s watchlist for a market status upgrade from “frontier market” to emergingstatus during the annual market review in May 2023.
Vietnam may then be notified of its upgrade to emerging market status duringthe MSCI annual market review in May 2024.
“Recently the market regulator has done a series of settlement overviolations, hopefully, this will make the upgrade process easier,"said Pham Luu Hung, chief economist of SSI Securities Co.
The investor community is expecting drastic changes, particularly increasingpublicity and transparency to protect investors.
At the Vietnam Business Meeting earlier this year, Dominic Scriven, Head of theCapital Markets Working Group of VBF, said the development of the capitalmarket depended very much on the confidence of investors, which can only bebuilt through improving the transparency and fairness of the market, applyingadequate sanctions to the violations and enforcement of protection mechanisms,especially in the Vietnamese market which currently has large participation ofindividual investors, accounting for 93 per cent of transactions.
The recent drastic settlements over violations on the market were thanks to agreat effort and determination from the Government, the Ministry of Finance andother authorities. Although it is inevitable that the market will decline inthe short term, strict sanctions due to negative effects will have apositive impact on the development of the stock market in the medium and longterm.
The goal of the regulator is to build and develop a safe, transparent andsustainable securities market, to ensure the interests of genuine businessesand investors, to increase the attractiveness of the stock market, draw moreinvestment capital flows both at home and abroad, helping to support theprocess of upgrading from frontier to emerging status.
According to Minister of Finance Ho Duc Phoc, the Ministry of Finance willdirect agencies such as the Finance and Banking Department, the Department ofAccounting and Auditing, and the State Securities Commission to ensure bothsupport and supervision, avoiding manipulation activities on the stock market.Acts of manipulation must be strictly punished, but businesses that comply withregulations must be fully supported.
At a recent conference on the capital market, Prime Minister Pham Minh Chinhalso said as the Government has set a goal to develop a healthy capital market,the most important thing was to protect genuine investors.
The Prime Minister has requested the Ministry of Finance to urgentlyreview and amend current inadequate regulations, especially regardingregulations on transparency of business information, rights andresponsibilities of management entities, market participants such as Statemanagement agencies, enterprises, securities companies, investors, strengthensanctions to strictly punish violations on the stock market to protectinvestors, thereby restoring trust, especially dealing with manipulation andprice manipulation, ensuring healthy, transparent and sustainable development.
In the future, Vietnam’s stock market will develop, with better quality,affirming its role as the main medium and long-term capital mobilisationchannel of the economy and enterprises, at the same time, it is an attractive,safe and effective investment channel for investors, PM said.
As of September last year, the Vietnamese stock market, along with Iceland,Mongolia and Russia, were on the FTSE's Upgrade Watchlist.
In the Market Outlook 2022 Report, VNDirect Securities Company has put forwardan optimistic scenario that the FTSE may announce the inclusion of
the Vietnamese stock market into the emerging market group during the annualmarket assessment in September of this year./.
VNA
