Further opening banks to foreign investors could bolster Vietnam’s efforts to earn a promotion to emerging markets status. The country is currently classified as frontier market by major index providers.
Vietnam is lifting foreign ownership limits because it is angling for a coveted but rare promotion to emerging markets status from the frontier markets classification from index provider MSCI.
In 2014, Vietnam formed a commission to explore taking the necessary steps for the country to shed its frontier status and gain entry into the widely followed MSCI Emerging Markets Index.MSCI does not have Vietnam on its list of markets that could potentially be upgraded to emerging markets status.
“The move will be “very positive” for the stock market and will support Vietnam’s efforts to be included in MSCI Inc.’s emerging-market index, said Andy Ho, chief investment officer at VinaCapital Group, the nation’s largest fund manager,” in an interview with Bloomberg.
Vietnam previously lifted foreign ownership limits on other sectors, including consumer groups, which combine for over a third of VNM’s roster.
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