With new securities, investment and enterprise laws being passed, some of these issues should be addressed, albeit gradually.

Vietnam on the Path to Emerging Market Upgrade, HSBC Believes
Vietnam is more investable than many think and is our most preferred frontier market, that it HSBC’ latest remark on Vietnam’s stock market. 
According to HSBC analysts, positives include accelerating FDI, a government push on infrastructure, structurally increasing purchasing power, and the rising profitability of the banking system
Profitability, attractive valuations, strong balance sheets and market reforms point to the likelihood of a multi-year bull run
Policy reforms to increase market depth and breadth
The government has passed new laws on securities, enterprises and investment, which came into effect on 1 January 2021, that should reduce some restrictions on foreign investors. The goal is to reduce the number of conditions for business and investments, simplify procedures and increase market transparency to international standards.
The securities law raised the issue of non-voting depository receipts (NVDRs) and more details will be provided in due course. According to the investment law, a market access restriction list will be provided through a decree. All sectors not included will be fully open to foreign investors.
Meanwhile, covered warrants and the new diamond index for companies which are already at their foreign ownership limits should also help foreign investors.
Vietnam on the path to emerging market upgrade
For a market to be upgraded to EM status it must meet various quantitative and qualitative criteria. Vietnam meets the quantitative criteria, such as the presence of large stocks, trading volumes, and the size of the market. The reason Vietnam is still classified as a frontier market is qualitative. Some of the key issues include the presence of foreign ownership limits, a lack of some disclosures in English, the lack of an offshore currency market and limitations in onshore currency markets, mandatory registration of accounts, prefunding of trades and restrictions on off market transfers. With new securities, investment and enterprise laws being passed, some of these issues should be addressed, albeit gradually.
Macro story one of the best in Asia
Vietnam remains one of the best investment stories in the region. The country is no longer just an outsourcing supply chain success story with a fortunate geographical location. It is assembling a home-grown economic growth engine that is making Vietnam an even more attractive destination in its own right. An export dependent economy which in theory should have suffered from external risks such as US-China trade tensions and the pandemic, in fact has grown stronger. 
During 2014-15, Vietnam was touted as one of the biggest beneficiaries of the Trans Pacific Partnership (TPP). However, when the US withdrew from the TPP, investors saw this as a structural impediment to Vietnam. 
HSBC disagreed. Despite the US withdrawal, Vietnam has various other trade deals in place which give it good access to international markets. The country remains highly competitive and still stands to benefit from China's rapid climb up the value chain, as it is one of the few countries that has been able to occupy the valuable export space China vacated at the lower end. (See Frontier Markets Equity Strategy - Back to the farmland, 7 June 2017).
Increased US-China trade tensions in 2017-18 led to worries among investors that global trade would suffer, in turn hitting Vietnam. But the country came out a winner due to the combination of its young and skilled labour force, favourable tax policies, geographic advantage, relatively good infrastructure, and stable politics (see Asia Frontier Insights Asia Vietnam equities: Pho’nomenal, 24 May 2018; and Frontier Insights: Retooling Asian supply chains – Vietnam postcard, 6 November 2018).
Set for success
HSBC has explained why HSBC thinks Vietnam is increasingly investable for foreign investors and how reforms will open up the market. Coupled with strong growth, this should set up Vietnam’s equity market for a multi-year bull market. In the next chapter, HSBC takes a detailed look at the growth story unfolding in Vietnam and the growing attraction of the country’s equities.