“Tens of billions of dollars can be poured into Vietnamese stocks if upgraded”

Market upgrading is an inevitable process in the long-term development and integration of the stock market. Currently, the size of capital that funds can allocate to frontier markets is only about $ 95 billion, while the size of capital for emerging markets is about $ 6.8 trillion. Thus, if Vietnam is upgraded to Emerging Markets, Vietnam could also receive tens or even hundreds of billions of USD into the market.

In the recent Talkshow Financial Street (The Finance Street) on VTV8, Mr. Nguyen Quang Thuan, Chairman and CEO of FiinGroup shared about the opportunity to upgrade Vietnam’s stock market.

Vietnam stock market is like a heavyweight boxer who is competing at light weight

According to Mr. Nguyen Quang Thuan, the story of the Vietnamese market as a heavyweight boxer who is competing in a lighter weight category is very clear. Currently, the size of Vietnam’s stock market capitalization is not inferior to that of other countries in the ASEAN region, but may also be in the emerging market classification according to MSCI standards.

In terms of market quality, it is not inferior in terms of the number of businesses and many other criteria in terms of scale. Upgrading, it’s like we put Vietnamese goods on a supermarket in the world so that investors can freely allocate money. Although there are some points that need to be improved, basically because of our more will and with the direction of the Government, Vietnam will soon achieve the goal of upgrading the market.

The Information Technology system is also related to two criteria in promoting the upgrade of Vietnam’s stock market. One is the infrastructure, in this case the hard infrastructure of the transaction system. The second is about products, thanks to that technology system, there will be more products like T+0, short selling…will help investors have more tools to invest and manage risks.

Regarding information technology infrastructure, this is a very important criterion and has been mentioned by MSCI in the previous assessment. However, Mr. Thuan believes that the information technology system will soon be improved.

The story of upgrading is currently not only in one ministry such as the Ministry of Finance, the Securities Commission, but also involving a number of ministries such as the Ministry of Planning and Investment and the State Bank. Especially, if there is the support of units like the New York Stock Exchange (USA), the financial center of the world, they understand the investment taste of large investment funds on a global scale. Demand is a very good thing for the Vietnamese stock market.

Mr. Thuan said that the foreign ownership ratio, or “room” for stocks that foreign investors want to invest in, as well as different products to support this issue is also the same. one of the criteria of upgrade organizations such as MSCI when evaluating upgrades.

The actual “room” for foreign investors in Vietnam is not much, this is different from Malaysia, Indonesia or the Philippines which have a more open mechanism. For example, a stock code of a company is very large in the market, but the percentage of shares that are freely traded is very low because the state owns 75% or 90% and the strategic partner owns 15%. .. Therefore, even upgrading foreign investors cannot push several hundred million dollars or billions of dollars or a large amount of money into such stocks. Now there are also many opinions that will consider opening the “room” for the banking and financial industry, this is also a point that we can consider.

Tens of billions of dollars will be poured into Vietnam when upgrading the market

Regarding the time to upgrade the market, the Chairman of FiinGroup assessed that the technical problem is not a big obstacle and depends on the implementation of the management agencies, especially the direction of the Government.

Mr. Thuan said that the Vietnamese stock market is like a heavyweight boxer who competes in light heavyweight, the scale of lightweight is currently about 95 billion USD. And of which funds are recommended by MSCI to allocate about 30% to the Vietnamese market in that basket, of course the funds will not allocate all that 30% because the market is still light. If Vietnam competes in the emerging middle market Emerging markets, the size of this class is 6.8 trillion USD and only 1% of the allocation is needed to have 68 billion USD in the market. And usually the money will enter the market before the upgrade is announced, like what happened in Pakistan, in Saudi Arabia or Kuwait.

In addition, the upgrade not only serves foreign investors, but we also serve 5.2 million Vietnamese securities investor accounts, to serve this domestic market and capital needs. There’s also a lot of investment.

If you look at Qatar, Pakistan can see that the valuation ground after upgrading is often one-and-a-half times or twice as much, both in terms of the index and liquidity and valuation, i.e. in terms of P/E. However, it also depends on the story of Vietnam.

Besides, not all are beneficial when we are up and down emerging. For example, in order to upgrade, organizations like MSCI will ask for the freedom of foreign exchange and capital mobility, how much will they accept? The capital flows that quickly come in, it also causes disturbances to the money market and the exchange rate market.

According to Bao Vy