FTSE Russel confirms upgradation of Việt Nam’s stock market from Sept 21

FTSE Russel confirms upgradation of Việt Nam’s stock market from Sept 21

Global index provider FTSE Russell has confirmed that Việt Nam will be upgraded from a frontier market to a secondary emerging market from September 21, according to its latest mid-cycle review released on Wednesday.

Global index provider FTSE Russell has confirmed that Việt Nam will be upgraded from a frontier market to a secondary emerging market from September 21. — VNA/VNS Photo Trần Việt

Việt Nam is set to be upgraded from a frontier market to a secondary emerging market from September 21, global index provider FTSE Russell confirmed in its latest mid-cycle review, marking a milestone expected to draw billions of dollars in foreign investment and deepen the country’s integration into global capital markets.

The FTSE Russell Index Governance Board said it is “satisfied” with Việt Nam’s progress in implementing a global broker framework, a key requirement that allows foreign investors to trade via international intermediaries without opening local accounts.

The reclassification, first announced in October last year, will be carried out in four phases through September 2027.

Vietnamese equities will be gradually added to FTSE’s global equity indices, starting with a 10 per cent weighting. This will rise to 20 per cent in March 2027, 35 per cent in June 2027 and a final 35 per cent in September 2027.

The phased approach is intended to ensure a smooth transition and align with the market’s capacity to absorb capital inflows.

The State Securities Commission of Vietnam said the upgrade reflects coordinated efforts by the Government, regulators and market participants, alongside cooperation with international financial institutions.

The regulator added that the move is expected to enhance market liquidity and strengthen Việt Nam’s position in global financial markets.

Market insiders say the upgrade could attract significant foreign capital. Some securities firms estimate inflows of between US$6 billion and $8 billion, while research from HSBC suggests inflows could reach as high as $10.4 billion under an optimistic scenario, including both active and passive funds.

Analysts at HCM City Securities Corporation forecast that passive funds could bring in $300 million to $500 million during the September rebalancing. Meanwhile, SSI Securities Corporation estimates total passive inflows of about $1.67 billion spread over three to five quarters, similar to the experience of Saudi Arabia following its 2019 upgrade.

Việt Nam is projected to account for about 0.037 per cent of the FTSE Global All Cap Index, 0.024 per cent of the FTSE All-World Index, 0.35 per cent of the FTSE Emerging All Cap Index and 0.227 per cent of the FTSE Emerging Index.

A total of 32 Vietnamese stocks are expected to qualify for inclusion in the FTSE Global All Index, including major blue chips such as Hòa Phát, Vietcombank, BIDV, Vingroup and Vinhomes.

Six months ago, FTSE Russell confirmed that Việt Nam had met all technical criteria for secondary emerging market status, pending improvements in accessibility for global investors.

The Ministry of Finance later issued Circular 08, allowing foreign investors to place orders through overseas brokerage firms, removing the requirement to open local accounts and eliminating pre-funding requirements before trading.

FTSE Russell is one of the world’s three leading index providers, alongside MSCI and S&P Dow Jones Indices, with its benchmarks widely used by asset managers, financial institutions and investors worldwide.

The firm classifies markets into four categories: developed, advanced emerging, secondary emerging and frontier. Several Asian markets, including China, India, Indonesia, the Philippines and Qatar, are already classified as secondary emerging markets.

Statistics showed that Việt Nam’s stock market has nearly 12.7 million trading accounts as of March, after more than 346,000 new accounts were opened during the month.

Solid basis

The latest review represents not only a continuation of the 2025 decision but also signals tangible improvements in market accessibility and real-world trading operations – key concerns for global investors. This is widely viewed as an important step in Việt Nam’s stock market upgrade roadmap, helping strengthen confidence in its operational efficiency and its ability to attract more sustainable foreign capital flows.

Talking to Vietnam News Agency correspondents in London, Christine Le, President of the Vietnam Finance and Investment Association in the UK, described the development as a clear demonstration of the effectiveness and consistency of recent reforms, as well as a substantive improvement in market accessibility and investability.

"Viêt Nam’s market is shifting from a paper-compliant status to one that meets operational standards in practice – a critical factor in attracting institutional capital," she said.

Recent reforms, including the implementation of a non-pre-funding mechanism, the establishment of a failed trade handling framework, and especially the allowance of trading via global brokers, have addressed long-standing concerns of foreign investors. These measures help reduce transaction risks and reinforce investors’ confidence, particularly as they are implemented in a context of macroeconomic stability and consistent governance.

She noted that one of the most significant impacts of the review is the repositioning of Việt Nam within the global capital allocation framework. Việt Nam had previously been viewed mainly as a frontier market with strong growth potential but not yet within the mandatory allocation universe of most institutional funds.

With the progress recognised by FTSE Russell in the March 2026 review, Việt Nam is gradually moving toward a position where it can be integrated into the strategic asset allocation structures of global investors. This shift is expected not only to increase capital inflows but also to improve their quality, making them more stable and long-term rather than speculative.

Despite the positive outlook, the upgrade process also places higher demands on the market, she stated, adding that policy priorities should move from meeting upgrade criteria to maintaining and enhancing the quality of an emerging market, both in standards and in actual investment experience. This includes effective and consistent legal enforcement, improved market access for foreign investors, higher asset quality and corporate governance standards, modernised market infrastructure, and stronger risk management capacity.

She stressed that maintaining macroeconomic stability and policy consistency is a fundamental factor determining the long-term attractiveness and credibility of the market. 

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