FTSE Russell is committed to supporting Vietnam’s capital market development, in the context that Vanguard funds began to disburse and add Vietnamese stocks to their portfolios from September 21.
On September 17, Prime Minister Le Minh Hung received Ms. Fiona Bassett, CEO of FTSE Russell and a delegation of representatives of global investment organizations visiting and working in Vietnam.
Ms. Bassett said FTSE Russell sees Vietnam as a notable growth story in Asia and a long-term partner. This organization will continue to support Vietnam in developing its capital market, attracting foreign capital flows and integrating deeper with the international market.
The support does not stop at stock upgrades, but also includes developing standards, improving market depth and liquidity, increasing resilience and attracting international investors. FTSE Russell also wants to support Vietnam in modernizing infrastructure, developing institutional investors, risk management tools and new products.
According to Ms. Bassett, Vietnam’s upgrade reflects recent reforms as well as the confidence of international investors. Vietnam has become the most liquid market in the Asia-Pacific region, with a high participation rate of foreign investors.
The proportion of Vietnam in the FTSE Emerging All Cap Index is expected to increase from 0.329% to 0.49%. According to FTSE Russell’s leader, this change can help Vietnam’s stock market attract billions of dollars in capital flow.
Prime Minister Le Minh Hung receives Ms. Fiona Bassett, CEO of FTSE Russell. Image: VGP
Vietnam will officially move from frontier market to secondary emerging market according to FTSE Russell classification from September 21. The process of bringing Vietnamese stocks into FTSE’s global index system is implemented in many stages, instead of being completed at once.
At the same time, capital flows from international investment funds began to be activated. Vanguard’s emerging market index funds commit to disbursement and add Vietnamese stocks to the portfolio from September 21. Vanguard and BlackRock – two of the world’s largest asset management corporations – also had representatives attending the meeting with the Prime Minister.
According to SSI Research, Vanguard funds simulating the FTSE GEIS index can buy about 240 million USD of Vietnamese stocks in the first phase of the upgrade process. During the entire upgrade process, the total passive capital flow into Vietnam could reach about 2.4 billion USD, even up to 4.45 billion USD in the active scenario.
At the meeting, Prime Minister Le Minh Hung said that the new ranking upgrade is the starting point for a new development cycle of the stock market. In the context of Vietnam setting high growth goals, the capital demand for the economy is very large. Therefore, developing the capital market is an urgent task to mobilize resources from the domestic and foreign private sectors, in addition to public investment capital and bank credit.
“Vietnam’s capital market, with its increasingly improved depth and breadth, will soon become an attractive destination for long-term international capital flows,” he said. According to the Prime Minister, the core indices of Vietnam’s stock market still maintain a fairly high growth rate despite experiencing some short-term adjustments.
The Government aims to develop the capital market in a more balanced direction with the credit system, thereby increasing medium and long-term capital sources for businesses and the economy.
According to the Prime Minister, Vietnam will continue to improve the legal framework, diversify securities products, develop long-term institutional investors and encourage individual investors to participate through professional institutions. Transaction and payment infrastructure will also be modernized, while supervision activities gradually shift from compliance checks to risk-based.
One of the next tasks is to soon deploy the central clearing partner (CCP) mechanism, and at the same time handle the problems of securities companies and global depository organizations. Vietnam will also promote listed businesses to apply ESG standards, increase information transparency and improve governance according to OECD principles.
The Prime Minister asked FTSE Russell to continue monitoring and evaluating the Vietnamese market, and coordinate with the Vietnamese side to make reform recommendations. He also asked this organization to support Vietnam in developing its financial market and attracting resources to the International Financial Center.