As a result, top equity index managers classify Vietnam as a frontier market, together with much less developed economies such as Benin or Burkina Faso.
One source directly involved in the discussions and another from the Vietnamese government said there could be at least a year’s delay unless significant progress is achieved shortly.The finance ministry did not respond to a request for comment. Additional liquidity is seen as crucial for Vietnamese banks, which account for about a third of the stock market capitalisation, to raise their comparatively low capital buffers, thus boosting financial stability.The inclusion in any major emerging market index by 2025 would require an announcement a year earlier, leaving only about 11 months for authorities to adopt and implement complex market reforms, one of the sources said.
Two of the sources involved in talks to address these issues said the prefunding requirement was seen as the main problem, especially by MSCI.