Vietnam’s Stock Market Upgrades Could Attract $25 Billion in Foreign Investment: World Bank

The World Bank suggests that Vietnam could potentially attract $25 billion in foreign investment in its stock market by 2030 if it transitions from being classified as a Frontier market to an Emerging one.

Ketut Ariadi Kusuma, a senior financial sector specialist at the Finance & Markets Global Practice of the World Bank Group, highlighted this upgrade as a strategic move during a recent event, aiming for Vietnam to achieve high-middle income status by 2035 and high income by 2045.

Such an upgrade would broaden foreign investors’ access to the market, potentially enabling investments of up to $78 billion if Vietnam implements robust reforms in its insurance industry and investment environment.

The classification of markets by U.S.-based finance firm MSCI Inc. as Frontier, Emerging, or Developed is pivotal. Vietnam aims to attain Emerging market status by 2025.

A higher classification indicates a market with a greater number of companies meeting specific market capitalization and liquidity criteria. Other factors include market accessibility, openness to foreign ownership, ease of capital flow, and investment instrument availability.

Kusuma emphasized that for Vietnam to ascend, it must raise foreign ownership caps for stocks and privatize more state-owned enterprises.

Failure to increase foreign ownership could limit investment to $5 billion; however, with an increase, this figure could rise to $8-15 billion.

Luu Trung Thai, chairman of MB Bank, stressed the importance of improving asset quality on the stock market to achieve this elevated status, as foreign investors are attracted to sound assets.

While foreign listings surged in Vietnam between 2003 and 2008, currently there are only six such listings.

Some major companies, like CP Vietnam, a subsidiary of Thailand’s Charoen Pokphand Foods, have expressed interest in listing.

Vietnamese Prime Minister Pham Minh Chinh has directed the Ministry of Finance and the State Securities Commission to address any obstacles that foreign companies may encounter during the listing process.

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