Vietnam Eyes MSCI Upgrade To Emerging Market October 1, 2014 http://www.emergingequity.org/#!Vietnam-Eyes-MSCI-Upgrade-To-Emerging-Market/cu6k/99297FCC-4967-499B-9F33-8B478AE30225 Vietnam is eager to woo more foreign investors to the nation’s stock markets as the country is building its case for an upgrade to emerging market status at MSCI. Vietnam’s State Securities Commission has assembled a team to study what is needed for the nation to get an upgrade from its current frontier market status to an emerging market, Nguyen Son, the commission’s head of market development told Bloomberg in an interview. “It’ll be a huge opportunity if we get upgraded,” Michael Kokalari, an analyst at CIMB Securities told Bloomberg in a recent phone interview. “The universe of the index would be much, much bigger.” Benchmark stock indexes of Qatar and the UAE rallied around 38% in the 12 months following MSCI’s announcement in June 2013 that both nations would be upgraded to emerging markets. Vietnam is already planning to merge the nation’s two main stock exchanges, the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange, and create the Vietnam Stock Exchange by 2015. Vietnam is also planning to sell shares of more than 400 state-owned firms and reduce the nation’s foreign-ownership limits to bolster its estimated $60 billion market. The Vietnamese government recently urged state-owned enterprises (SOEs) to list on a stock market soon after becoming public firms, in a move that should increase liquidity and attract more foreign investment, according to a Reuters report. In November, Vietnam’s Ministry of Finance submitted a plan to Prime Minister Nguyen Tan Dung that recommended lifting the limit on foreign ownership limits of voting shares in some industries to 60%. Vietnam’s foreign inflows are “below potential,” Tran Van Dung, the Chairman and CEO of the Hanoi Stock Exchange, told Bloomberg in a recent interview. “A key to attract more foreign investment is a real reform of the banking industry, restructuring of state-owned enterprises sector and opening up of foreign ownership levels,” James Bannan, a fund manager at Coeli Asset Management told Bloomberg. Although there is a lot of work ahead for Vietnam to reach a landmark upgrade to emerging market status, the nation is taking encouraging steps, as such an upgrade would bring billions into the nation thus boosting its equity indexes and associated ETF’s with exposure to the nation. Year-to-date, Vietnam’s Ho Chi Minh Stock Index (VN-Index) is up over 25% and the Market Vectors Vietnam ETF (NYSEARCA:VNM) is up close to 20%. Sources: Bloomberg, Reuters, WSJ