View of arbitrators

Tough odds for VN market upgrade

19/03/2018 09:43
 

Việt Nam’s securities market has a 25 per cent chance of being upgraded to the “emerging market” status

from its current “frontier market” level by 2021. — Photo ndh.vn

Việt Nam’s securities market has a 25 per cent chance of being upgraded to the “emerging market” status from its current “frontier market” level by 2021, according to Võ Trí Thành, senior economist at the Central Institute for Economic Management (CIEM) cum VIAC arbitrator.

The market status levels are regulated by Morgan Stanley Capital International (MSCI), the US independent provider of research-driven insights and tools for institutional investors. A review of any particular stock market and its reclassification carried out by MSCI would increase the attractiveness of that market to global investors.

However, Thành said there were three factors that would make it difficult for Việt Nam to get upgraded by 2021 as expected by market analysts, investors and regulators.

“The challenges that Việt Nam has encountered so far are information disclosure or corporate and market transparency, openness to foreign investors and capital, and opening the capital and financial market to the private sector,” he said.

While information disclosure is quite costly for both market regulators and traded firms, the two others would require the Government and its agencies to make stronger efforts to make trading standards more accessible for foreign investors, according to Thành.

Information disclosure has remained an obstacle for foreign investors if they want to make investment in Vietnamese companies as many companies have hesitated to make their business more transparent for highly-costly interpretation of financial and corporate reports.

In addition, foreign investors are allowed to own up to 100 per cent of a Vietnamese company if that firm does not operate in the sectors involved in national security and safety such as banking, property and transportation.

In such cases, foreign investors can have a maximum of 49 per cent ownership in the business. For commercial banks, the foreign ownership is limited at 30 per cent.

Thành delivered his cautious outlook for the Vietnamese securities market at a seminar held on Wednesday by the US Embassy’s American Centre and the Vietnam Executive MBA Programme in Hà Nội of the University of Hawai’i (VEMBA Programme).

Cấn Văn Lực, chief economist at the Joint Stock Commercial Bank for Investment and Development of Việt Nam (BIDV), said "even if Việt Nam is determined to get approval from MSCI on promoting the status of its securities market, it will be quite challenging".

He said Việt Nam would have to be admitted onto MSCI’s watchlist for a market reclassification, which is expected to occur in 2019. Then it would take the Vietnamese securities market at least two more years to become an emerging market as regulated by MSCI.

“An upgrade of the Vietnamese securities market’s status will attract more foreign capital, encourage local firms to make their business more transparent and motivate market regulators to standardise the market’s trading regulations,” he said.

"It also would prove that the Vietnamese securities market is among the most attractive in the world and encourage the Government to improve the economy’s investment and business conditions," Lực said.

Positive 2018 ahead

Việt Nam’s economy in general and its securities market in particular are showing positive signs and higher achievements are reachable in 2018.

Chief economist Lực at BIDV forecast the benchmark VN Index on the HCM Stock Exchange would advance 30-40 per cent this year with trading liquidity rising 20-25 per cent and foreign capital increasing by approximately 30 per cent.

"More products will be launched this year, including covered warrants and other futures for the derivatives market," he said, adding other changes for the securities market are the revision of the Securities Law and the possible merger of the two local exchanges.

"Such potential achievements are supported by the prospective growth of the Vietnamese macroeconomic conditions," he said.

Việt Nam’s gross domestic product (GDP) growth rate in 2017 was 6.8 per cent and it is forecast to reach 7 per cent at the end of this year, boosted by good performances in industrial production, exports and consumption, according to Lực.

Both direct and indirect foreign investment will also play an important role in boosting the Vietnamese economy, he said, adding that efforts will be made by the Government to improve the business and investment climate, and local companies will benefit from the recently-signed Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). — VNS


Read more at

http://vietnamnews.vn/economy/424432/tough-odds-for-vn-market-upgrade.html#Eidkfdd9cp8QbXO4.99

Share Post
SOME OTHER NEWS
  • Local businesses advised to capitalize on FTAs 12/11/2018 11:17

    Despite its involvement in in numerous Free Trade Agreements (FTAs) and new-generation FTAs, Vietnam has yet to take full advantage of incentivesand opportunities it receives from its participation in FTAs.

  • Farm produce needs improved quality to unlock EU market 23/08/2018 11:46

    Vietnam is one of the important suppliers of farm produce to the EU, ranking 12th among all exporting nations and meeting 2.2% of the demand, above Thailand, New Zealand, Malaysia and Canada. However, the EU has paid due attention to food value, quality, safety and hygiene and has issued stringent regulations on antibiotics, pesticides and tracing product origin.

  • US-China trade war evolves into battle for power 10/08/2018 11:18

    Last week, international media reported that the Trump administration was considering slapping a 25 per cent tariff on US$200 billion of imported Chinese goods, 10 per cent higher than its initial proposal, in a bid to pressure Beijing to make trade concessions.

  • Concerns about Multiple Sublicenses from National Competition Committee Model 17/05/2018 13:46

    The National Competition Committee should be an independent governmental body rather than a ministerial affiliate, said at a Consultative Workshop on Revised Law on Competition, raising concerns about the birth of multiple sublicenses, monopolistic behaviours and power abuse in the public service. 

  • Forgiving tax debts must be done transparently 06/04/2018 14:08

    Tax losses caused by enterprises that have received contracts to be paid from the State budget, but haven’t yet paid their taxes, are also under consideration for tax clearance. The amount of tax arrears is estimated at over VNĐ542 billion (roughly $24 million).

  • Mine declines: Good news for sustainability 07/03/2018 10:54

    Statistics from the General Statistics Office of Việt Nam (GSO) showed that the mining industry has posted a record slump since 2011, with the growth rate dropping by 7.1 per cent in 2017 and 4 per cent in 2016. This could be a small disappointment amid lots of bright spots in the country’s wider socio-economic picture last year. But this could also lead to an alarming conclusion – the mining industry will be unable to return to growth, and so the growth pattern must be transformed. 

  • Insurance books should not be used as collateral 06/03/2018 17:09

    Lawmakers, lawyers and leaders from Vietnam Social Security (VSS), a State agency in charge of the country’s social insurance programme, have all advised against the practice of using social insurance books as collateral by banks, credit institutions and small loan businesses at a conference last week on the subject.  

  • Five Vietnamese think tanks have been ranked in the top 100 06/03/2018 17:07

    The five think tanks are Việt Nam’s Institute of World Economics and Politics (30th), the Diplomatic Academy of Việt Nam (40th), the Việt Nam Institute of Economics (42nd), the Việt Nam Institute for Economic and Policy Research (VEPR - 56th), and the Việt Nam’s Institute for American Studies (97th).

    REGISTER EMAIL WITH VIAC