Upgrading Vietnam stock market: Still needs more time

	Illegal earnings from the stock market may be subject to criminal liability
	Viet Capital may list in 3rd quarter
	Stock market, a good channel for capital mobilization

Vietnam's stock market was still in the lower level with far distance from other markets. Photo: N. Hien.

Vietnam stock market is still in the bottom

According to a report on the ratings of some new markets announced by MSCI, the Vietnam's stock market has not yet been listed by MSCI as a rising class in emerging markets and remains in the niche market. Bao Viet Securities Company (BVSC) has just released the report "Opportunities for upgrading to emerging market group - MSCI". Accordingly, the Vietnam's stock market met some quantitative regulations such as capitalization and liquidity but some quantitative regulations, such as the degree of capital mobility, openness to foreign investors have not fully met the requirement. Therefore, it will take more time and there are still opportunities for Vietnam upgrading to emerging markets in the future.

According to the above assessment of MSCI, the report of BVSC said that Vietnam's stock market was still in the lower level with far distance from other markets. There are two improvements in the issue of foreign ownership and fair dealing rights for foreign investors. However, these changes are not strong enough for MSCI to change its assessment of "the Vietnam’s stock market needs to improve further". In general, MSCI's assessment in the recent report for the stock market of Vietnam has not changed compared with the assessment in 2016 with any of the 17 indicators rated as "market access".

BVSC experts pointed out that market comparisons of seven other countries, including Bangladesh, Argentina and the four emerging markets of the Philippines, Thailand, Indonesia, Pakistan, and Singapore market. It can be seen that the number of criteria for ++ and + evaluation of Vietnam is the lowest in the number of criteria which are evaluated. Is the most in this group. Not only is it inferior to the top-tier market, even in comparison with other top-tier markets like Bangladesh and Argentina, Vietnam still has a long way to go. This means that Vietnam's market is still weak to be considered for upgrading and many issues need to be overcome.

More time to be needed

BVSC's report indicated that Vietnam could improve and meet MSCI's requirements in the "foreign room limits", "remaining room rates available", "equity rights" with foreign investors, and "information flow". Although Decree 60 related to the opening of the room has been announced for nearly 2 years, the number of enterprises opening the floor also accounts for a small proportion. Besides businesses in the conditional business lines, sensitive industries are not allowed to open rooms. There are also many businesses which do not really want to open the room because of feeling unnecessary. This led the MSCI to retain its assessment of Vietnam's "foreign room limits" and "remaining room availability".

BVSC expected that in the coming time, new mechanisms could be introduced to encourage businesses to open rooms to 100%, along with more open legal documents for business enterprises. Businesses in the field are not too sensitive, thereby, can help the number of open business room on the floor increase and MSCI will have a more positive assessment on the issue. MSCI attaches great importance to the full dissemination of information, reports and legal documents in English to foreign investors, which makes it easy for foreign investors to access information as quickly as possible.

Vietnamese stock market attracts foreign investors The Vietnamese stock market has reached nine year peak with the strong purchase from foreign sector who ...

Although progress has been made, the State Securities Commission and market members still need to work harder on the issue, which is not difficult to overcome. However, the criteria of "freedom of the foreign exchange market", "securities lending" and "short selling" are difficult issues to overcome the Vietnamese market. However, they are not required factors to be upgraded. It can be seen that even MSCI's assessment of some emerging markets in the region such as Indonesia and the Philippines on these issues remains at the level of -/? (which needs to be improved).