The question of whether Vietnam will ever receive a re-rating to “emerging market” status is an intriguing one. Currently, Vietnam is classified as a “frontier market” by major index providers such as MSCI and FTSE Russell. However, there has been growing speculation about the possibility of Vietnam being upgraded to the coveted status of an emerging market.
To understand this potential re-rating, it is important to consider various factors. One key aspect is the country’s economic performance and development. Vietnam has shown impressive economic growth over the past few decades, driven by its vibrant manufacturing and export sectors. The Government’s commitment to economic reforms and attracting foreign investment has also played a significant role in positioning Vietnam as an attractive investment destination.
Another factor that plays a crucial role in determining market classification is the level of market accessibility for foreign investors. In recent years, Vietnam has taken steps to enhance its capital markets and improve regulations to attract more foreign investment. The gradual liberalization of its financial sector, along with efforts to strengthen corporate governance practices, are positive signs that may contribute towards a potential re-rating.
Additionally, investor sentiment towards Vietnam plays a vital role in any potential re-rating decision. A favourable perception among international investors regarding political stability, regulatory environment, and transparency can significantly impact how Vietnam is viewed in terms of its market classification.
While there are positive indicators for Vietnam’s prospects of being upgraded from “frontier” to “emerging” status, it ultimately depends on the evaluation criteria set by index providers and their assessment of various factors mentioned above. It should be noted that these decisions are not made overnight but rather through comprehensive assessments conducted periodically by index providers. Therefore, it remains uncertain if or when Vietnam will receive a re-rating to “emerging market” status. Nonetheless, with continued economic growth and ongoing efforts to improve its investment climate, Vietnam may well be on track towards achieving this milestone in the future.
