Vietnam seeks emerging market status

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2OOFXR60XTVietnam is building its case for an upgrade to emerging-market status at MSCI Inc. to draw more international investors to a stock market one-tenth the size of Singapore’s, Bloomberg reported.

The State Securities Commission has formed a team to study what’s required for an upgrade of the nation’s frontier-market classification, Nguyen Son, the commission’s head of market development, said in an interview. Investors with about $9.5 trillion of assets use indexes compiled by New York-based MSCI to measure performance.

The Southeast Asian country already plans to combine its two exchanges, reduce foreign-ownership limits and sell shares in state-owned companies to bolster the $59 billion market. Benchmark equity gauges in Qatar and the United Arab Emirates jumped at least 38 per cent in 12 months after MSCI said in June 2013 they would be raised to emerging-market status.

“It’ll be a huge opportunity if we get upgraded,” Michael Kokalari, a Ho Chi Minh City-based analyst at CIMB Securities International Ltd., said. “The universe of the index would be much, much bigger.”

MSCI isn’t currently reviewing Vietnam’s market classification, said Chin-Ping Chia, a managing director at the index provider in Hong Kong. An emerging-market ranking requires “significant” openness to foreign ownership and ease of capital flows, as well as minimum levels of liquidity and market-capitalisation, according to MSCI’s website.

Emerging markets in MSCI indexes have an average market capitalisation of about $564 billion, versus about $30 billion for those in the frontier gauge. The latter measure has advanced 18 per cent this year, versus a 21 per cent gain for Vietnam’s benchmark VN Index.

MSCI probably won’t consider Vietnam for an upgrade unless the country eases its foreign ownership limits, Thomas Hugger, the chief executive officer at Hong Kong-based Asia Frontier Capital, said. Overseas holdings in several of Vietnam’s biggest companies have reached the legal limit of 49 per cent, making it difficult for international investors to buy all the shares they want.

The Ministry of Finance submitted a plan to Prime Minister Nguyen Tan Dung in November that recommended lifting the limit on foreigners’ holdings of voting shares in some industries to 60 per cent. The government is still working on the proposal, the SSC’s Son said.

 

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Reading Time: 2 minutes

Vietnam is building its case for an upgrade to emerging-market status at MSCI Inc. to draw more international investors to a stock market one-tenth the size of Singapore’s, Bloomberg reported.

Reading Time: 2 minutes

2OOFXR60XTVietnam is building its case for an upgrade to emerging-market status at MSCI Inc. to draw more international investors to a stock market one-tenth the size of Singapore’s, Bloomberg reported.

The State Securities Commission has formed a team to study what’s required for an upgrade of the nation’s frontier-market classification, Nguyen Son, the commission’s head of market development, said in an interview. Investors with about $9.5 trillion of assets use indexes compiled by New York-based MSCI to measure performance.

The Southeast Asian country already plans to combine its two exchanges, reduce foreign-ownership limits and sell shares in state-owned companies to bolster the $59 billion market. Benchmark equity gauges in Qatar and the United Arab Emirates jumped at least 38 per cent in 12 months after MSCI said in June 2013 they would be raised to emerging-market status.

“It’ll be a huge opportunity if we get upgraded,” Michael Kokalari, a Ho Chi Minh City-based analyst at CIMB Securities International Ltd., said. “The universe of the index would be much, much bigger.”

MSCI isn’t currently reviewing Vietnam’s market classification, said Chin-Ping Chia, a managing director at the index provider in Hong Kong. An emerging-market ranking requires “significant” openness to foreign ownership and ease of capital flows, as well as minimum levels of liquidity and market-capitalisation, according to MSCI’s website.

Emerging markets in MSCI indexes have an average market capitalisation of about $564 billion, versus about $30 billion for those in the frontier gauge. The latter measure has advanced 18 per cent this year, versus a 21 per cent gain for Vietnam’s benchmark VN Index.

MSCI probably won’t consider Vietnam for an upgrade unless the country eases its foreign ownership limits, Thomas Hugger, the chief executive officer at Hong Kong-based Asia Frontier Capital, said. Overseas holdings in several of Vietnam’s biggest companies have reached the legal limit of 49 per cent, making it difficult for international investors to buy all the shares they want.

The Ministry of Finance submitted a plan to Prime Minister Nguyen Tan Dung in November that recommended lifting the limit on foreigners’ holdings of voting shares in some industries to 60 per cent. The government is still working on the proposal, the SSC’s Son said.

 

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