Exclusive: Vietnam eyes China model to seek index upgrade, boost investment

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Vietnam is planning to relax its stock market settlement procedures for foreign investors, a critical measure to convince equity index managers to uprade the country to emerging market status and attract hundreds of millions of dollars of new investment, sources said.

Following a China model, Vietnam would allow brokers to vouch for foreign investors when they buy shares, a move that was seen as a progress by the FTSE index provider, and could lead to remove a regulatory hurdle that has hampered for years the upgrade of the Ho Chi Minh City Stock Exchange

"Last week's meetings with FTSE were positive and could lead to a possible upgrade to the secondary emerging market status by September 2025," said Le Thi Le Hang, chief strategy officer at Vietnam's leading broker SSI, who is directly involved in the plans. To bypass the hurdle, Vietnamese authorities and brokers are devising a mechanism similar to one used in China under which securities firms would guarantee for foreign funds' payments, effectively giving them credit for the two days until transactions are completed.

FTSE and Vietnam's market regulator, the State Securities Commission, did not reply to requests for comment. A simultaneous upgrade from managers at the much larger MSCI index is seen as out of the question at the moment because of MSCI's stricter requirements, the sources said.

 

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