Making news

FTSE Russell adds Vietnam to watch list for reclassification

Vietnam was one of three countries added onto FTSE Russell’s watch list for a possible future upwards reclassification.

In its annual country classification review published on early September 27, the UK-based data service provider said Vietnam “is currently classified as a Frontier market and is being added to the watch list for possible reclassification as Secondary Emerging.”

The two other equity markets that were also added into FTSE Russell’s watch list were Argentina and Tanzania.

In June, Vietnam’s equity market failed to be added into the watch list of Morgan Stanley Capital International (MSCI) for classification review for a possible lift from a Frontier market to an Emerging one.

According to FTSE Russell, Vietnam’s equity market is classified as a lower-middle income, speculative market with restrictions in some key elements such as fair treatment of minority shareholders, selective incidence of foreign ownership, free and well-developed foreign exchange market, stock lending, off-exchange transaction and efficient trading mechanisms.

Vietnam has also missed three FTSE Russell requirements on trading settlement, permitted short sales and developed derivatives market.

Among criteria that have been met by Vietnam are the quality of market monitoring by formal regulators, sufficient competition to ensure high quality custodian services and market dept information/visibility and trading report process.

The announcement had been widely forecast by Vietnamese securities firms. BIDV Securities Co (BSC) recently said in a report that the Vietnamese market would be put onto the watch list and it would take one or two years for Vietnam to be upgraded to an emerging market.

“The action of FTSE Russell will have big impacts on the Vietnamese equity market like pushing the market regulators to improve and upgrade the market,” BSC said.

“Secondly, investors’ confidence will get better and their short-term trading strategies may be changed to prepare for the portfolio shake-ups of exchange-traded funds (ETFs).”

Bao Viet Securities JSC (BVSC) said in a report that FTSE Russell may raise the status of Vietnam’s equity market in September 2019 if it was able to pass such requirements, and the upgrade would aid the market by drawing more attention from foreign investors.