Phuong Nguyen and Francesco Guarascio
HANOI (Reuters) – Vietnam is preparing to launch a new stock trading system next week that will speed up the settlement of trades, as part of reforms aimed at modernizing the country’s stock market and attracting more foreign investors.
The move, if completed successfully, will increase the chances of the Southeast Asian country being reclassified as an emerging market. Both MSCI and indices currently classify Vietnam as a frontier market, preventing many funds, family offices and others from investing in companies listed there.
The new stock trading system provided by the Korea Exchange has been tested for several months and is expected to go live on May 2 after securities firms complete the transition from the old system during the five-day public holiday period starting with the closure business in April. on Jan. 26, according to a document sent to brokers by Vietnam’s main exchange in Ho Chi Minh City and reviewed by Reuters.
The exchange did not immediately respond to a request for comment.
The new system will process transactions throughout the day, speeding up transactions and facilitating trading, especially short selling, which was hampered by the current slower system.
This is part of the reforms that can lead to a renewal of the market. FTSE could make a positive announcement as early as September and Vietnam’s rating upgrade should be completed by next year, officials said. The MSCI update is expected to take longer.
Last year, the World Bank estimated that modernization could lead to a net influx of between $5 billion and $25 billion into the $200 billion market by the end of the decade. Vietnam’s benchmark stock index rose 4.5% in 2024 but fell more than 7% this month.
Key reforms needed to improve the rating include less stringent restrictions on foreign ownership of listed companies and the removal of pre-financing requirements for share transactions.
Public consultations on the new mechanism to remove the last obstacle will be completed in the second half of May.