Vietnam has seen an improvement in transferability to “no major issues” largely due to the increase in off-exchange trading and physical transfers that can be made without prior regulatory approval.
In the recently published global market access report, MSCI Market Ratings Organization assessed that Vietnam's "transferability" criterion has been changed from needing improvement "-" to no major problems "+".
According to analysts, this proves that Vietnam's efforts have been somewhat positively recognized. Vietnam has improved its transferability thanks to the increase in off-exchange transactions and physical transfers that can be made without prior approval from the regulatory agency.
In addition, Vietnam continues to work to develop its market with plans to address a number of accessibility issues, such as foreign ownership limits, pre-funding requirements, and the lack of English-language market disclosure. MSCI will continue to closely monitor the progress of these reforms.
However, Vietnam still has 8 criteria that need to be improved to complete the set of 18 criteria of MSCI including: Foreign ownership limit; Foreign room; Equal rights of foreign investors; Degree of freedom in the foreign exchange market; Investor registration and account establishment; Market regulations; Information flow and finally clearing;
- Regarding the “Foreign ownership limit” criterion, companies in some sensitive sectors and fields are still subject to foreign ownership limits ranging from 0% to 51%. These limits still affect more than 10% of stocks on the Vietnamese stock market.
- Regarding the criterion of “Remaining foreign room for foreign investors”, the stock market is greatly affected by the foreign room issue. More than 1% of MSCI Vietnam IMI index is affected by low foreign room.
- Regarding the criterion “Equal rights of foreign investors”, some business information is still not available in English. In addition, the rights of foreign investors are limited due to strict foreign ownership limits applied to the total foreign ownership ratio in general and the ownership of each investor in particular.
- Regarding the criterion of “Degree of freedom in the foreign exchange market”, there is currently no foreign currency trading market and the domestic trading market is limited (foreign exchange transactions must be related to securities transactions).
- For the criterion “Investment registration and account opening”, transaction registration is mandatory and account opening needs to be approved by VSD.
- For the criterion “Market regulations”, market regulations are not yet fully available in English.
- For the “Information Flow” criterion, information about the stock market is often not available in English or is not detailed enough.
- For the “Payment and Settlement” criterion, there are no overdraft facilities and no pre-payment transactions.
Commenting on this report by MSCI, in a recent upgrade prospect report, BIDV Securities Company (BSC) expects that in the near future, in June 2025, the Vietnamese stock market may be considered by MSCI to be included in the Watch list to be upgraded to an emerging market.
Previously, the Vietnamese stock market received more positive assessments when FTSE recognized the efforts of the management agency - specifically the determination of the head of the Government - in resolving the remaining bottlenecks.
In addition, the Government Office issued Notice 122/TB-VPCP on the Prime Minister's conclusion at the Conference on deploying the task of developing the Stock Market in 2024: accordingly, the Prime Minister requested the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank to take urgent measures and actions to remove bottlenecks to soon upgrade the market.
Most recently, the Ministry of Finance and the State Securities Commission are seeking opinions from market members and foreign investors on amending a number of important circulars including: Circular No. 96/2020/TT-BTC dated November 16, 2020, No. 120/2020/TT-BTC dated December 31, 2020, No. 119/2020/TTBTC dated December 31, 2020, No. 121/2020/TT-BTC dated December 31, 2020.
BSC Research assesses that if the draft is passed, it will resolve most of the remaining issues in upgrading the market.
Source: VnEconomy
