Vietnam Pushes for Emerging Market Status with 2027 CCP Launch

Photo courtesy of Bangkok Post

Vietnam is poised to make a significant leap in its financial markets with plans to officially launch a central counterparty (CCP) mechanism by early 2027. This move is a crucial part of Vietnam’s strategy to be reclassified as an emerging market, potentially as soon as this year, and attract more foreign investment, according to the State Securities Commission.

Since 2018, Vietnam has been on FTSE Russell's watchlist for market status upgrade. Currently classified as a frontier market, this status limits the investment Vietnam can attract from global funds, investors, and family offices. An upgrade to emerging market status could channel an estimated $5 billion (approximately 179 billion Thai Baht) into Vietnam's financial markets, as per World Bank forecasts.

During a visit to Hanoi, FTSE Russell's global head of equity and multi-asset, Gerald Toledano, reviewed Vietnam’s progress. The government unveiled a four-phase plan to secure the upgrade, set to conclude in 2027. This plan includes finalising the legal framework and creating a subsidiary under the Vietnam Securities Depository and Clearing Corporation to operate the CCP.

Prime Minister Pham Minh Chinh, in a meeting with Toledano, expressed hopes for FTSE's support in Vietnam's reclassification, as reported by Voice of Vietnam. Toledano praised Vietnam's strong market liquidity, noting it surpasses regional counterparts like Thailand and Singapore.

Vietnam's financial markets, however, remain small in comparison to its neighbours. The main stock index recently held a market valuation of about $245 billion (around 8.8 trillion Thai Baht), starkly lower than Thailand’s $455 billion (about 16.3 trillion Thai Baht) and Singapore’s $490 billion (roughly 17.6 trillion Thai Baht), according to LSEG data.

Introducing the CCP will provide a robust safety mechanism, acting as an intermediary between buyers and sellers in the equity market to ensure trades are completed even in the event of a default. Additional reforms have already been rolled out, including a new transaction settlement system and relaxing pre-funding requirements for foreign investors, addressing previous barriers to market reclassification.

Investor confidence appears to be growing, with foreign purchases of Vietnamese stocks increasing following a trade agreement with the United States. The VN-Index, Vietnam’s benchmark, has climbed 7.22% this month alone. FTSE Russell is expected to release a review in September, and if Vietnam secures the upgrade, the reclassification process could take six to 12 months, aligning with the agency's guidelines.

Previously, Vietnam aimed to achieve this upgrade by 2025. With these strategic advancements, the nation hopes to accelerate its timeline, enhancing its financial market influence on the global stage.

  Adapted by ASEAN Now from Bangkok Post 2025-07-18