Vietnam seeks market enhancement to entice prolonged capital investments
Vietnam is taking significant strides towards upgrading its stock market to achieve FTSE Russell emerging market status by September 2025. The journey began in 2018, with a series of comprehensive regulatory, technological, and market structure reforms aimed at meeting FTSE standards.
Bui Hoang Hai, vice chairman of the State Securities Commission (SSC), affirmed Vietnam's determination to upgrade the stock market. Key reforms include amending securities regulations to meet FTSE criteria, such as addressing prefunding requirements for foreign investors and failed trade mechanisms, launching the Korea Exchange’s KRX trading system, and improving transparency, clearing, settlement, and brokerage operations.
The Ho Chi Minh City Stock Exchange (HSX) marked its 25th anniversary with the launch of a new platform on July 28. The event was a testament to Vietnam's stock market's remarkable progress, which has narrowed the gap with regional markets. Notably, Vietnam's stock market liquidity, measured by trading volume, is the highest in the region, even surpassing markets with 70 to 100 years of development.
The Ministry of Finance and the SSC have been actively reviewing and proposing amendments to legal documents to address obstacles and meet international criteria for market upgrade. The SSC has also established an advisory dialogue group on capital market development to accelerate the upgrade process.
Circular No.68/2024/TT-BTC and Circular No.18/2025/TT-BTC, issued by the Ministry of Finance, address the criteria that Vietnam was found not to meet in a FTSE Russell assessment, specifically the delivery versus payment settlement cycle and settlement and costs related to failed trades. The adoption of non-prefunding transaction models since late 2024 has made foreign investment smoother.
The SSC is working closely with the State Bank of Vietnam in developing Circular No.03/2025/TT-NHNN, which simplifies procedures and facilitates foreign indirect investment activities in the Vietnamese stock market. This circular, effective since June, is another crucial step in attracting international investors to Vietnam's stock market.
The SSC has emphasised that the upgrade is part of a long-term development toward a transparent, fair, and medium- to long-term capital market. The VN-Index has accordingly rallied, hitting multi-year highs with strong trading volumes, reflecting growing investor confidence and market momentum.
Linh, a representative from the SSC, highlighted that hundreds of thousands of non-pre-funded orders by foreign institutional investors have been handled safely and efficiently under the new circulars regarding mechanisms to handle failed trades.
The upgrading of Vietnam's stock market could open the door to large-scale, stable, and long-term international investment. Currently, over 10 million investor accounts are active on Vietnam's stock market, a testament to its growing appeal to both domestic and international investors.
FTSE Russell will announce the results of its market review for Vietnam's stock market in September. The SSC, along with the Ministry of Finance, is confident that these reforms will position Vietnam as a leading Southeast Asian equity market and make it more attractive to institutional global capital.
Investors and businesses may find attractive opportunities for investing in Vietnam's stock market given the extensive reforms aimed at meeting FTSE standards. The strategic adoption of non-prefunding transaction models and the simplification of foreign investment procedures, as highlighted by Circular No.03/2025/TT-NHNN, are designed to facilitate more international capital in the market.
The upgrade of Vietnam's stock market to achieve FTSE Russell emerging market status is expected to open the door for large-scale, stable, and long-term international investment, potentially leading to a growing investor base both domestically and internationally.
