Enterprises expect the stock market to be upgraded by 2025

Many enterprises consider that the stock market will be upgraded in 2025. Photo: ST

Many solutions promote the process of upgrading the market

According to the assessment of experts from KBSV Securities Company, Vietnam has made certain moves to speed up the upgrade process based on FTSE Russell criteria. The common criteria that most assessment organizations require Vietnam improve are pre-transaction deposits and payment transactions; Information flow provides details in different languages ​​and room restrictions for foreign investors.

The Government and the Ministry of Finance have made moves to resolve more specific issues, especially related to pre-transaction deposits and information disclosure. At the end of March 2024, the State Securities Commission asked for opinions on amending and supplementing 4 circulars, of which the focus of the amendments was to improve deposit requirement at the 100% before trading for foreign institutional investors, it is only required to have enough money before confirmed the transaction results by the depository members and payment obligations with the Vietnam Securities Depository and Clearing Center. Only securities companies with sufficient financial capacity can provide the deposit services below 100% to ensure payment obligations guaranteed by securities companies in case investors do not have enough money for settlement. Along with that, the authorities also set out a roadmap to periodically or irregularly disclose information in English based on the size of listed companies and public companies from January 1, 2025 to January 1, 2028.

“We think this will be the solution to remove the biggest problems based on FTSE Russell's upgrade criteria, especially the pre-transaction deposit issue. This mechanism still ensures fairness for domestic investors because currently only this group of investors can use margin loan services. Therefore, we expect the earliest roadmap for Vietnam's stock market to be announced for upgrade in September 2024, officially upgraded by FTSE Russell in the review period September 2025”, KBSV securities commented

According to the assessment of enterprises, a number of factors can create major impacts on the Vietnamese stock market this year as well as the direction of their impact has been pointed out. Of these, nearly 78% of surveyed enterprises evaluated the State Securities Commission's implementation of solutions to promote the process of upgrading the market, including improving the legal system, enhancing transparency and professionalization of the market helps attracting more foreign investment capital and enhancing the position of Vietnam's stock market, which was the factor receiving the top attention of enterprises. 66.7% of enterprises said that this was the factor expected to have the most positive impact on the stock market. In addition, the upgrade of the stock market is also expected by enterprises to have a positive impact on other areas of the economy as well as the corporate governance system, promoting transparent improvement and operations to meet higher standards.

Upgrading and increasing the ability to attract investment capital

Commenting on time which the Vietnamese stock market will be officially upgraded to a secondary emerging market by FTSE, the majority of enterprises participating in Vietnam Report's survey believed that the market would be upgraded by 2025. Of these, 33 % of enterprises thought that the market would be upgraded in the first half of 2025 and 44.4% of enterprises believed that the second half of 2025 was the time when the market would be upgraded after the bottlenecks of the market were soon removed in the remaining months of 2024. Meanwhile, BSC Securities Company also commented that in March 2024, FTSE would have an evaluation period and by September 2024 the possibility of Vietnam's stock market would be considered official upgrade by FTSE, by September 2025, FTSE would officially upgrade Vietnamese stocks to emerging markets and would likely be included in MSCI's monitoring list of MSCI by June 2025.

According to KBSV Securities Company's assessment, the upgrade brings positive potential to the stock market. Specifically, KBSV cited typical cases such as: Pakistan's Karachi index increased by 300% after being approved to upgrade in 2009; Kuwait's stock market index increased by 53%, Qatar increased by 20%... after being approved to upgrade. KBSV believes that stock market performance often tends to be positive when information is added to the monotoring list or an official upgrade is approved. In addition, the Vietnamese stock market will have more opportunities to attract investment capital if it is approved by FTSE Russell into the emerging market group.

“We estimate the proportion of the Vietnamese market to be about 0.7 - 1% in the FTSE Emerging Index basket, which can attract from US$ 800 million - 1 billion of new investment capital from ETF funds. In addition, according to World Bank estimates, a successful upgrade to emerging market could bring Vietnam an additional US$ 10 billion in investment capital, including both direct and indirect capital. Besides, the upgrade of the stock market often comes with increased transparency and management processes, thereby creating a safer and more reliable investment environment”, KBSV experts emphasized.