Vietnam outlines new financial reforms in bid for emerging market status
Vietnam has been on global index provider FTSE Russell's watchlist for an upgrade since 2018. It is currently classed as a frontier market, limiting the investment it can attract from funds, investors, and family offices in the nation's listed companies.
An upgrade to emerging market status could rapidly channel US$5 billion into Vietnam's financial markets, according to World Bank estimates.
The government released a four-phase plan running through 2027 to secure the upgrade during a visit to Hanoi by FTSE Russell's global head of equity and multi-asset, Gerald Toledano.
The roadmap includes finalising the legal framework and establishing a Central Counterparty-operating subsidiary under the Vietnam Securities Depository and Clearing Corporation.
In a meeting with Toledano late on Thursday, Prime Minister Pham Minh Chinh (pic) expressed his hope FTSE would support a classification upgrade for Vietnam, state-broadcaster Voice of Vietnam reported.
Toledano highlighted Vietnam's strong liquidity, which he said surpassed regional peers Thailand and Singapore, VOV added.
Vietnam's financial markets are small in comparison with regional peers. As of Thursday's close, the main benchmark stock index had a market valuation of around $245 billion, compared to around $455 billion for the main Thai index and around $490 billion for Singapore's STI Index, LSEG data showed.
The CCP will act as an intermediary between buyers and sellers in the equity market, ensuring trades are honoured even if one party defaults.
The country has already introduced other measures, such as a new transaction settlement system and the removal of a requirement for overseas investors to fully pre-fund equity trades, to address obstacles to its potential reclassification.
Foreign investors have increased purchases of Vietnamese stocks following the announcement of a trade agreement between the United States and Vietnam.
The benchmark VN-Index has risen 7.22% so far this month. FTSE Russell is set to release a review in September.
If Vietnam secures the upgrade to secondary emerging market status, the reclassification process could take six to 12 months, consistent with the agency's procedural guidelines.
Vietnam had previously targeted 2025 for achieving the upgrade. - Reuters
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
7 hours ago
- The Star
Morocco's central bank explores digital currency cross-border payments
FILE PHOTO: A general view of the Central Bank of Morocco in Rabat, Morocco, February 20, 2020. REUTERS/Youssef Boudlal/File photo RABAT (Reuters) -Morocco's central bank was exploring the use of its own digital currency for peer-to-peer and cross border payments, bank governor Abdellatif Jouahri said on Monday. A central bank digital currency (CBDC) is controlled by the central bank, in contrast to cryptocurrencies that are usually decentralised. Cryptocurrencies have been banned in Morocco since 2017, but the public continues to use them underground, circumventing restrictions. The bank has been working with the IMF and the World Bank to assess the payment system impacts of its central bank digital currency (CBDC), Jouahri told a conference in Rabat. The Moroccan central bank, together with its Egyptian peer and the World Bank, was also exploring the use of the CBDC for cross-border transfers, he said. A draft law on crypto assets is currently under review by the finance ministry before entering the adoption process, Jouahri said last month. (Reporting by Ahmed Eljechtimi; Editing by Chizu Nomiyama )
The Star
8 hours ago
- The Star
Ringgit extends gains to close higher amid Japan political uncertainty
KUALA LUMPUR: The ringgit extended its gains against the US dollar at Monday's close, as the greenback struggled to appreciate amid political uncertainties in Japan, said an analyst. At 6 pm, the ringgit rose to 4.2320/2365 against the greenback, compared to Friday's close of 4.2410/2455. SPI Asset Management managing partner Stephen Innes said the ringgit trended higher, supported by the election setback for Japan's Prime Minister Shigeru Ishiba's coalition, which did not trigger broader market volatility. "The absence of contagion allowed Asian and other emerging market currencies, including the ringgit, to edge higher and strengthen modestly,' he told Bernama. Echoing Innes, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit traded firmer in tandem with a 0.13 per cent decline in the US Dollar Index to 98.268 points, as major currencies such as the euro, yen, and the British pound all appreciated against the greenback. "Despite uncertainties surrounding Japanese politics, the US dollar is struggling to appreciate, yet this has not resulted in a weak Japanese yen,' he said. On that note, Mohd Afzanizam said the ringgit was generally firmer against the US dollar, with the pair hovering around RM4.2375 in the afternoon, compared to RM4.2493 during the morning session. At the close, the ringgit was traded mostly higher against a basket of major currencies. It strengthened against the British pound to 5.6954/7015 from 5.6999/7060 and advanced versus the euro to 4.9277/9330 from 4.9336/9388 at Friday's close. However, it fell against the Japanese yen to 2.8612/8644 from 2.8517/8549. Meanwhile, the local note rose vis-à-vis the Singapore dollar to 3.2990/3028 from 3.3027/3065, and gained against the Thai baht to 13.0754/0954 from 13.3027/3065. Additionally, the ringgit appreciated against the Indonesian rupiah to 259.2/259.6 from 260.2/260.6 and edged up versus the Philippine peso to 7.40/7.41 from 7.41/7.43 previously. - Bernama
The Star
12 hours ago
- The Star
Singapore hits record high for 14th session, sets the pace for Asian equities
A file photo of the SGX Centre in Singapore. — Bloomberg Singapore's equity benchmark scaled an all-time high for the 14th consecutive session on Monday, buoyed by strong inflows to high-yield stocks, while bourses elsewhere in emerging Asia also began the week on a largely positive note. Most regional currencies slid against the U.S. dollar: the Indonesian rupiah and the Philippine peso weakened about 0.4% each, while South Korea's won, Taiwan's dollar, and Thai baht slipped marginally. An MSCI gauge of global emerging market currencies also declined, now down more than 1% since hitting an all-time high on July 3. Singapore's FTSE Straits Times Index climbed for an 11th consecutive session, its longest winning streak on record, and rose as much as 0.9% to 4,225.790 points. The benchmark index was driven by a rally in banks, telecoms, and industrial firms. Analysts say the city-state's equity market has emerged as a relative safe-haven asset amid rising global risks, with ample liquidity, a strong local currency, and low interest rates boosting appetite for attractive dividend yield. "Low interest rates and a lack of alternative yield instruments are likely to continue supporting market activity (in Singapore)," DBS analysts said, adding that a recovery in wealth management will offer medium-term tailwind for Singapore banks. Defensive stocks are gaining appeal among global investors who seek stability amid ongoing uncertainty over U.S. trade policy and macroeconomic challenges. Singapore's economy also surprised to the upside last week, reporting faster-than-expected second-quarter growth and a 13% jump in exports for June, further reinforcing bullish sentiment. Across the rest of Southeast Asia, equities held largely firm: Indonesia's benchmark index jumped as much as 1% and continued to hover around its mid-December 2024 highs, while stocks in Manila and Seoul climbed 0.7% and 0.4%, respectively. The MSCI index of equities in emerging Asia slipped 0.2%, but has gained more than 2% this month, outperforming the broader Asia-Pacific equities index, which includes Japan, which is up only 0.3%. After last week's rate cut in Indonesia, markets are now waiting for the next catalyst, most likely growth data due early next month, said Fakhrul Fulvian, chief economist at Trimegah Securities. He warned that the absence of near-term triggers could cap further upside. Thailand's SET Index climbed nearly 1% but turned negative within an hour of opening. The gauge has risen more than 10% so far this month, outperforming its regional peers after clocking deep losses in the first half. Investors in Asia continue to keenly scrutinise tariff headlines ahead of an August 1 deadline to strike a deal with Washington. Local sentiment has improved after Vietnam and Indonesia reached an agreement on export levies, although final details are yet to be confirmed. In the Philippines, President Ferdinand Marcos Jr is set to visit the United States this week to secure a trade agreement with Washington. The U.S. earlier this month raised tariffs on exports to 20%, up from 17% threatened in April. HIGHLIGHTS: ** Indonesian 10-year benchmark yield falls 2.9 bps to 6.522% ** ST Engineering and DBS at record high, Singtel at mid-August 2016 high ** South Korea reviews various options to improve North Korea ties ** Japan's shaky government loses upper house control - Reuters
