Vietnam Is Striving To Be Upgraded From Frontier Market To Emerging Market Status

New data from Dragon Capital Group, the largest independent asset management company in Vietnam, reveals huge growth in the Vietnamese stock markets during the Covid-19 crisis has seen the country’s market capitalisation and liquidity gaps increase over several established ‘emerging markets’ (please see the attached press release).

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In November 2021, the value of average daily turnover on Vietnam’s stock markets was $997.5 million, compared to $851.8 million for Indonesia, $434 million for the UAE, $338.9 million for Mexico and $334.6 million for Poland.  These are all classified as emerging markets by influential index provider MSCI, which has c. $9.5tn benchmarked against indices. Vietnam currently has the heaviest weighting in the Frontier Market category and is targeting to be upgraded to MSCI Emerging Market status by 2025.

In November 2020, Dragon Capital’s analysis reveals the value of average daily turnover of Vietnam’s stock markets was $225.5 million – smaller than the corresponding figures for Indonesia, Mexico and Poland, which were $467.4 million, $290.4 million and 275.3 million respectively.

When it comes to the market capitalisation of Vietnam’s stock exchanges, on 30th November it stood at $338.3 billion, compared to $290.5 billion for Poland and $175 billion for Qatar – both countries are ranked as MSCI Emerging Markets.

Ms. Quynh Le Yen, Portfolio Manager of Dragon Capital’s Vietnam Equity (UCITS) Fund said: “Earlier this year, Vietnam’s stock market hit a new daily record of over $2.2 billion worth of shares traded on all bourses. Part of this growth has been down to a surge in new retail investors in the country – this year has seen in some months over 100,000 new stock trading accounts opened in the country, with many people encouraged to start trading by the strong returns that the Vietnamese stock market has offered in recent months, as well as solid earnings growth and low valuations on a forward-looking basis.

“Vietnam’s growing stock market capitalisation and rapidly improving liquidity will only add to the debate on why and when Vietnam should be upgraded to emerging market status.”