Tuesday, 21 May 2019

Vietnam projected to upgrade to secondary emerging market status in 2020: Brokerage

Updated at Saturday, 01 Dec 2018, 10:57
The Hanoitimes - Vietnam’s government is determined to work for the upgrade of the local stock market to emerging market status soon.
In the last annual review published by FTSE Russell, a leading global provider of financial services, in September 2018, Vietnam was added to the watch list for possible upgrade to Secondary Emerging Market in the future, for which the country is projected to reach this status in September 2020 in an ideal scenario, according to Vietnam Dragon Securities Company (VDSC). 

In general, a country needs to be on the watch list for at least one year before a possible upgrading announcement and then another year before the official reclassification. Recently, Kuwait, China A shares and Saudi Arabia were the newest Secondary Emerging markets. 

The brokerage looked at each case to see how close Vietnam is to the status. 

For the case of Kuwait, after being added to the watch list in September 2008, Kuwait had to wait for ten years before achieving the status in 2018. The outstanding criteria was “Clearing & Settlement – T+2/T+3” which was addressed in May 2017 by the country.

With regard to China A shares, increasing accessibility of the China A-share market for international investors was a long-lasting problem for China. It refers to the “formal stock market regulatory authorities actively monitoring the market” criteria which was finally met by the country in early 2018, just before the upgrading announcement from FTSE.

Last but not least, after three years of being on the watch list, Saudi Arabia fulfilled two outstanding criteria which were “settlement – rare incidences of failed trades” and “clearing & settlement – T+2/T+3”. At a result, FTSE announced the upgrade of Saudi Arabia in September 2018.

Overall, all three countries were added to the FTSE’s watch list even when they were still not meeting all criteria. The upgrading announcement came right after they fulfilled the requirements. 

Considering that Vietnam was added to the watch list while it had met nine out of nine criteria, VDSC stated if the country can maintain these conditions throughout the ongoing review year, Vietnam will be upgraded to Secondary Emerging Market status in 2020.

At the Vietnam Economic Forum on Capital-Finance Market in Hanoi on August 21, Deputy Prime Minister Vuong Dinh Hue said the Vietnamese government is determined to work for the upgrade of the local stock market to emerging market status soon.

Chairman of the State Securities Commission of Vietnam Tran Van Dung affirmed that with drastic measures from the government in creating a level playing field for both local and foreign companies, Vietnam can achieve the target of becoming an emerging securities market in the next two years.
Hai Yen
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