"KRX's 'Go Live' Initiative Opens Doors to Potential $10 Billion Capital Inflow in the Stock Market"

The KRX system is a premise to help Vietnam upgrade its stock market from a frontier market to an emerging market. If the upgrade is successful, it is estimated to attract 10 billion USD in foreign capital flows.

According to the plan, Vietnam is expected to complete the system preparation work and be ready to deploy the KRX system on December 25.

On December 22 - December 24, securities companies will continue the final test (FAT) of the system's operational functions to ensure the stock trading process is like a trading day. Normal.

According to KBSV Securities, the official operation of the KRX trading system is considered an important premise for upgrading the market from frontier to emerging, as well as allowing the implementation of securities sales operations. wait for return (T0).

Specifically, the KRX system is the necessary infrastructure to deploy the central clearing partner model, Central Clearing Counterparty (CCP) and from there, solve one of the key bottlenecks of leveling up: Prefunding required.

Upgrading the market ranking helps the Vietnamese stock market have the opportunity to attract investment capital from foreign financial institutions. In particular, the earliest and most obvious impact is the buying of ETF funds that are using the MSCI Emerging Markets Index and FTSE EM indexes as reference.

Working session between the State Securities Commission and representatives of FTSE Russell to remove obstacles in the criteria for upgrading Vietnam's stock market on October 16.

Some studies estimate that upgrading to an emerging market can bring an additional 10 billion USD of new indirect investment to Vietnam, of which an additional 2 - 5 billion USD can be received in the first year. However, KBSV also noted that the operation of CCP will only solve one of the bottlenecks, while factors related to barriers to foreign investors will require stronger moves from the executive agency.

According to statistics, there are currently 860 investment funds in the world using emerging market stock indexes as reference indexes, with a total net asset value of up to 705 billion USD.

Of these, there are 844 investment funds using MSCI's emerging market index as a reference, with a total net asset value of about 615 billion USD, and 16 investment funds using FTSE Russell's emerging market index as a reference. reference, with a total net worth of about 90 billion USD.

VinaCapital estimates that in case Vietnam's stock market is upgraded from frontier market to emerging market, the proportion of Vietnamese stocks will account for about 0.7 - 1.2% in the market index. emerging from MSCI and FTSE Russell. Thus, additional foreign capital flows into Vietnam's stock market could reach 5 - 8 billion USD.

According to a World Bank report, if Vietnam successfully upgrades its market status, it can receive about 7.2 billion USD of investment capital flow into the market each year.

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