Vietnam to Relax Stock Market Settlements for Foreign Investors

Vietnam plans to relax its stock market settlement procedures for foreign investors, a critical step in convincing equity index managers to upgrade the country to emerging market status and attract hundreds of millions of dollars in new investment. Following the lead of China, Vietnam would allow brokers to vouch for foreign investors when they buy shares, a move seen as a step forward by the FTSE index provider and could lead to the removal of a regulatory barrier that has stymied the upgrade of the Ho Chi Minh City Stock Exchange for years.

The bourse, the smallest among the major Southeast Asian economies, is now classified as a frontier market by both the MSCI and FTSE indices. As a result, many funds, investors, and family offices are unable to invest in the companies listed there.

According to people familiar with the talks, FTSE experts visited the country last week and were presented with details of the new plan to break the years-long deadlock.

"Last week's meetings with FTSE were positive and could lead to a possible upgrade to the secondary emerging market status by September 2025," said Le Thi Le Hang, chief strategy officer at Vietnam's leading broker SSI, who is directly involved in the plans.

To meet that timeline, FTSE would need to announce the upgrade as early as September next year, six or twelve months before the actual promotion, according to its procedures on upgrades.

If upgraded, Vietnam would join the likes of Indonesia, Philippines, Qatar and China, moving up from the frontier index, which it shares now with less advanced markets such as Sri Lanka and Kenya, and where it accounts for an unwieldy 38 percent of total capitalization.