Vietnam targets market upgrade to boost global investment profile

November 07, 2023 | 17:12
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Vietnam's government and financial regulators are actively pursuing reforms to meet international settlement standards, aiming for an upgrade from a frontier to an emerging market to attract significant global investment and strengthen the nation's credit standing.
Vietnam targets market upgrade to boost global investment profile

At the November 6 parliamentary question session, delegate Tran Van Tuan from Bac Giang province delegation announced the government's target to elevate Vietnam's international standing and facilitate the country's sovereign credit rating to investment grade by 2030.

Tuan inquired of Minister of Finance Ho Duc Phoc on the current assessment by international organisations of Vietnam's sovereign credit rating.

"What are the strengths in our national credit coefficient, and what measures does the government have in place to improve our rating to an investment-grade level, thereby supporting and enhancing our capital mobilisation capabilities?" he asked.

In response, Finance Minister Phoc said that Vietnam's creditworthiness was highly regarded globally.

"While some nations have faced downgrades, Vietnam's rating has been elevated to a 'positive and stable' outlook, or BB+. This fosters confidence among financial funds and investors to inject capital into our economy, propelling development," Phoc said.

Phoc added that recent meetings in the United States with organisations such as S&P and Moody's reflected their regard for Vietnam's financial market.

These institutions trust in the dynamism and developmental potential of Vietnam, despite raising concerns about issues such as the handling of high credit debt, overdue bond debts, public investment disbursements, and real estate market regulation.

"They are satisfied and trustful of the solutions Vietnam has put forward," he said.

The Ministry of Finance, in conjunction with agencies such as the Securities Commission and the Ministry of Planning and Investment, is implementing measures to upgrade the Vietnamese stock market's classification.

Currently, market classification organisations FTSE Russell and MSCI categorise Vietnam as a frontier market.

This status acts as a barrier to investment organisations and funds considering capital influx into listed companies. Recently, representatives from FTSE Russell engaged with the State Securities Commission to discuss policy and market updates, outlining detailed solutions to address obstacles in Vietnam's market upgrade criteria.

Le Thi Le Hang, director of Strategy at SSI Securities, who is actively involved in the planning process, said to Reuters, "Meetings with FTSE Russell have been very constructive and could lead to Vietnam's stock market being upgraded from a frontier to an emerging market by September 2025."

Previously, in FTSE Russell's late September 2023 update, the Vietnamese stock market continued to be in the watchlist for an upgrade to an emerging market, meaning it remains within the Frontier Market category.

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By Tri Lam

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