A KB Securities Vietnam Company's office(Photo: tinnhanhchungkhoan.vn)
Hanoi (VNA) – Vietnam remainsa secondary emerging market following the latest market re-classification bythe British analytics and data solution provider FTSE Russell.
FTSERussell had listed Vietnam inits watchlist for potential re-classification since September 2018. The latestresult, made on late September25, had been widely expected by local securities firms.
Accordingto Bao Viet Securities Co (BVSC), in FTSE Russell’sMarch re-classification, Vietnam metseven of nine criteria to upgrade it to the emerging markets status.
Thetwo standards Vietnam didnot satisfy were Settlement – Rare incidence of failed trades andDeliver-versus-payment (DvP) Settlement Cycle, which were marked “notavailable” and “restricted”.
BVSCsaid that Vietnam did not meet those two itemsas investors were asked to make a sufficient deposit before trading, subject toCircular 203/2015/TT-BTC dated December 21, 2015.
FTSERussell, in its assessment, said that the rule did not allow thesettlement to follow the DvP model and failed trades were almost non-existentin the market.
Accordingto KB Vietnam Securities Co (KBSV), Vietnam may get a chance to be promoted toemerging markets status by September 2021.
Untilthe upcoming review in March 2021, Vietnam willnot have enough time to make changes to its existing issues addressed by FTSERussell, KBSV said.
TheState Securities Commission (SSC) may complete upgrading the trading system inearly 2021, KBSV predicted, which would become a milestone for Vietnam to transform its settlement method frompre-funding – which requires the investor to have a sufficient amount of cashin the account to buy and sell securities – to DvP system, the brokerage said.
However,the transformation will not go smoothly as there are some differences betweenthe SSC and the settlement service provider, and securities firms will need some timeto complete updating their technology to match the stock exchanges’ tradingsystems, the company said.
KBSVsaid that a failure in next year’s market status re-classification and the slowprocess of equitisation among State-owned enterprises may make Vietnam miss the chance to draw a huge flow offoreign capital.
VNDirectSecurities Corporation (VNDS) forecast that about 1.4-1.9 billion USD worth of foreign capital may flow into thelocal equity market if Vietnam islifted to emerging markets status./.
VNA
