Reforms deliver tangible results

Viet Nam’s capital market is witnessing positive momentum as a wide range of reforms relating to trading infrastructure, operational mechanisms and the legal framework are being implemented in a coordinated manner, laying an important foundation for the country’s market upgrade ambitions.

This was among the key issues highlighted by UBS Bank in a report sent to clients following its participation in the seminar “Policies for Developing Viet Nam’s Capital Market”, which has been organised by the State Securities Commission of Viet Nam in Singapore.

According to UBS, at the event, Vu Thi Chan Phuong, Chairwoman of the State Securities Commission, together with representatives from major financial institutions including BlackRock, Morgan Stanley, HSBC and SSI, shared a range of insights into the development and reform process of Viet Nam’s capital market.

Based on discussions at the seminar, UBS assessed that the reforms underway in Viet Nam’s capital market are substantive, measurable and capable of strengthening confidence among the international investment community.

One of the most notable achievements has been the sharp reduction in the time required for investors to open trading accounts, from around three to six months previously to approximately two days. In addition, most transactions are now conducted under a non-prefunding mechanism, improving market accessibility for foreign investors.

Market liquidity has also improved significantly. According to information shared at the event, trading value in the first quarter of 2026 rose by around 50% year-on-year, while progress in finalising regulatory frameworks continues to accelerate.

Notably, the implementation of the central counterparty clearing (CCP) mechanism has been identified as the market’s most important near-term milestone. Under current plans, the mechanism is expected to become operational from the beginning of 2027.

Speakers at the seminar noted that, for the CCP mechanism to operate effectively, three key conditions must be ensured: maintaining reforms related to the non-prefunding mechanism; implementing margin requirements through securities firms instead of custodian banks; and optimising the efficiency of obligation netting among market participants.

Alongside the CCP mechanism, several other infrastructure components are also being further developed, including the straight-through processing (STP) system, omnibus trading accounts (OTA), securities borrowing and lending (SBL) mechanisms, as well as enhanced financial capacity for securities companies.

According to UBS, the average daily trading value on Viet Nam’s stock market currently stands at around 1.2 billion USD. Market capitalisation reached approximately 419 billion USD in mid-May 2026.

The report also cited remarks by one speaker at the seminar, noting that at certain points during the first quarter of 2025, trading value on Viet Nam’s stock market surpassed that of Singapore and Indonesia.

Building the foundation for market reclassification

Alongside reforms to infrastructure and operational mechanisms, the roadmap for upgrading Viet Nam’s market classification continues to attract significant attention from international investors.

According to information shared at the seminar, Viet Nam has, for the first time, established a formally approved market-upgrade plan endorsed by the Government, complete with a specific roadmap and implementation tasks.

SSC Chairwoman Vu Thi Chan Phuong stated that FTSE Russell had confirmed Viet Nam’s upgrade to Secondary Emerging Market status from September 2026. Looking further ahead, the country aims to secure inclusion in the MSCI Emerging Markets Index by 2030.

To achieve these objectives, the Government’s roadmap focuses on several priorities, including the implementation of omnibus trading accounts (OTA), the launch of the CCP mechanism and the gradual relaxation of foreign ownership limits (FOL).

These initiatives have been approved by the Prime Minister and are being implemented according to a clearly defined schedule.

According to participants, FTSE Russell’s confirmation of Viet Nam’s upgrade has generated a highly positive response, attracting considerable interest from index providers and international investors, with levels of engagement exceeding initial expectations.

Regarding foreign ownership limits in commercial banks, which are currently capped at 30%, speakers noted that any adjustment would require amendments to higher-level legal regulations rather than simple administrative decisions.

Nevertheless, the State Bank of Viet Nam’s decision to allow four commercial banks participating in restructuring programmes to increase their foreign ownership cap to 49 per cent is viewed as a positive signal for market liberalisation.

According to the roadmap presented at the event, the implementation of CCP and STP will remain key priorities in the short term, while the relaxation of foreign ownership limits will be considered at a more advanced stage of market development.

In addition to market reforms, participants also devoted significant attention to recent capital-flow trends in Viet Nam’s stock market.

Accordingly, foreign investors have recorded net outflows of approximately 2.5 billion USD since the beginning of the year. However, this has been more than offset by around 3.5 billion USD in domestic capital inflows.

Participants noted that this demonstrates the market’s resilience, with domestic retail and institutional investors absorbing most of the supply from foreign investors.

Foreign capital withdrawals were largely attributed to global macroeconomic factors and exchange-rate developments rather than concerns about Viet Nam’s economy or domestic stock market.

UBS also highlighted views expressed that Viet Nam’s rising export market share mirrors, in several respects, China’s trajectory during its earlier development phase. This is considered a structural attraction for long-term investors once global economic conditions become more favourable.

To further enhance market transparency, Viet Nam is studying international best practices, including those of Indonesia, to address issues related to free-float disclosure.

The State Securities Commission plans this month to publish on its website a breakdown of share ownership across seven investor categories: state ownership, strategic investors, insiders and related parties, major shareholders, cross-ownership holdings, restricted shares and free-float shares.

These measures reflect the regulator’s efforts to improve transparency, enhance market accessibility for investors and gradually align Viet Nam’s capital market with international standards.