Illustrative photo (Source: www.msci.com)Hanoi (VNA) - Vietnam remained in the MSCI Frontier Markets Indexafter the US investment research firm completed its 2017 market classificationreview recently.
Vietnam’s securities market will not be included in the MSCI review listfor a potential reclassification to Emerging Markets status.
In its statement, MSCI announced it would include 222 China A Large Cap stocksin its Emerging Markets Index and ACWI Index in June 2018.
MSCI also announced it would launch consultations on the potential inclusion ofthe MSCI Saudi Arabia Index and MSCI Argentina Index in its Emerging MarketsIndex.
The decision on Vietnam had been forecast by several local brokerage firms.They said the Vietnamese market has not met some qualitative requirements setby the MSCI regarding foreign investors’ concerns about local investmentconditions.
According to Viet Dragon Securities Co (VDSC), there are three major criteriathat MSCI takes into consideration when putting it into the review list forreclassification.
The brokerage firm said that Vietnam had not met expectations on marketopenness to foreign investment.
In June 2015, the Government issued a new policy allowing foreign investors toincrease their ownership in local companies to 100 percent. However, this hasnot had a far-reaching impact as a significant number of listed companies areoperating in sectors that are not open, like national security and defence,real estate, information communication technology and banking.
Since the decision took effect, only 19 listed companies have lifted the barfor foreign ownership, and that is a very small number compared to 700 sharesbeing traded in the securities market.
In addition, foreign investors are still having problems converting dong-basedaccounts into foreign currency accounts, and the country has not completed itsmarket infrastructure to meet demands of foreign investors, VDSC said.
Nguyen Quang Thuan, general directorof market research firm StoxPlus, said other factors in MSCI’s decisionincluded parity between foreign and domestic investors, information disclosurein English and insecure settlement and clearing mechanism for securitiestrading.
Vu Chi Dung, Director of International Cooperation Department of the StateSecurities Commission, told the business news website vneconomy.vn thatupgrading Vietnam’s market from the frontier status to emerging status willtake a long time and lot of efforts from both market regulators and members toupgrade the market.
In general, quantitative assessment is not a big issue for Vietnam as thecountry has had seven stocks that meet requirements, including dairy producerVinamilk (VNM), property developer Vingroup (VIC) and Vietcombank (VCB), andthere are more to come in the future, he said.
On the other hand, qualitative assessment is a biggest challenge for Vietnam asit is based on the feedback of foreign institutional investors, Dung said,adding that applying new policies is not enough to ensure MSCI will raise thestatus of Vietnam’s securities market.
Regarding the issue of information disclosure in English, he said somecompanies actually do not have English reports on their business performances,but this is a problem that foreign investors face in other regional marketslike Japan and Indonesia, where English is not an official language.
Things have improved for foreigninvestors as they are now able to find English-written reports and policies onthe websites of the State Securities Commission, local exchanges and the VietnamSecurities Depository, he said.
In addition, the Finance Ministry and market regulators have released somepolicies to encourage local companies to publish information in English,helping foreign investors get easier access to both business and market conditions.
Raising status for Vietnam’s securities market requires regulators, members andinvestors to improve trading quality, Dung said. “The aim should be to improveand complete the market to attract more foreign investment, contributing to thecountry’s socio-economic development.”-VNA
Vietnam’s securities market will not be included in the MSCI review listfor a potential reclassification to Emerging Markets status.
In its statement, MSCI announced it would include 222 China A Large Cap stocksin its Emerging Markets Index and ACWI Index in June 2018.
MSCI also announced it would launch consultations on the potential inclusion ofthe MSCI Saudi Arabia Index and MSCI Argentina Index in its Emerging MarketsIndex.
The decision on Vietnam had been forecast by several local brokerage firms.They said the Vietnamese market has not met some qualitative requirements setby the MSCI regarding foreign investors’ concerns about local investmentconditions.
According to Viet Dragon Securities Co (VDSC), there are three major criteriathat MSCI takes into consideration when putting it into the review list forreclassification.
The brokerage firm said that Vietnam had not met expectations on marketopenness to foreign investment.
In June 2015, the Government issued a new policy allowing foreign investors toincrease their ownership in local companies to 100 percent. However, this hasnot had a far-reaching impact as a significant number of listed companies areoperating in sectors that are not open, like national security and defence,real estate, information communication technology and banking.
Since the decision took effect, only 19 listed companies have lifted the barfor foreign ownership, and that is a very small number compared to 700 sharesbeing traded in the securities market.
In addition, foreign investors are still having problems converting dong-basedaccounts into foreign currency accounts, and the country has not completed itsmarket infrastructure to meet demands of foreign investors, VDSC said.
Nguyen Quang Thuan, general directorof market research firm StoxPlus, said other factors in MSCI’s decisionincluded parity between foreign and domestic investors, information disclosurein English and insecure settlement and clearing mechanism for securitiestrading.
Vu Chi Dung, Director of International Cooperation Department of the StateSecurities Commission, told the business news website vneconomy.vn thatupgrading Vietnam’s market from the frontier status to emerging status willtake a long time and lot of efforts from both market regulators and members toupgrade the market.
In general, quantitative assessment is not a big issue for Vietnam as thecountry has had seven stocks that meet requirements, including dairy producerVinamilk (VNM), property developer Vingroup (VIC) and Vietcombank (VCB), andthere are more to come in the future, he said.
On the other hand, qualitative assessment is a biggest challenge for Vietnam asit is based on the feedback of foreign institutional investors, Dung said,adding that applying new policies is not enough to ensure MSCI will raise thestatus of Vietnam’s securities market.
Regarding the issue of information disclosure in English, he said somecompanies actually do not have English reports on their business performances,but this is a problem that foreign investors face in other regional marketslike Japan and Indonesia, where English is not an official language.
Things have improved for foreigninvestors as they are now able to find English-written reports and policies onthe websites of the State Securities Commission, local exchanges and the VietnamSecurities Depository, he said.
In addition, the Finance Ministry and market regulators have released somepolicies to encourage local companies to publish information in English,helping foreign investors get easier access to both business and market conditions.
Raising status for Vietnam’s securities market requires regulators, members andinvestors to improve trading quality, Dung said. “The aim should be to improveand complete the market to attract more foreign investment, contributing to thecountry’s socio-economic development.”-VNA
VNA
