Vietnam stock market set for Emerging Market status in September

Vietnam stock market set for Emerging Market status in September

Vietnam’s stock market has passed its latest review and is officially on track for an upgrade to emerging market status this September, paving the way for potential inclusion on MSCI’s watch list within the next year.

Early on April 8, FTSE Russell released the results of its interim review under the March equity market classification assessment, confirming that Vietnam is scheduled to be reclassified from frontier market to emerging market, effective September 21.

FTSE Russell also published a provisional list of Vietnamese equities meeting the screening criteria for inclusion in the FTSE Global All Cap Index, based on data as of the close on December 31, 2025. The list is expected to feature a range of blue chips, including Hoa Phat Group, Vietcombank, BIDV, Vingroup, Vinhomes, Masan Group, FPT, Vinamilk, and SSI Securities.

Vietnamese equities meeting the screening criteria for inclusion in the FTSE Global All Cap Index. Source: FTSE Russell

However, FTSE Russell emphasised that the final list of eligible Vietnamese securities for index inclusion will be announced on August 21. The report also outlined Vietnam’s projected weightings across relevant indices post-upgrade.

Pham Luu Hung, chief economist and head of SSI Research, noted that the actual upgrade implementation will be conducted in four tranches rather than evenly distributed as initially expected, with uneven intervals between phases.

Specifically, the first tranche is scheduled for September, followed by a second in March 2027 with an estimated weighting of around 20 per cent. The remaining allocation will be deployed in two subsequent tranches, each accounting for roughly 35 per cent.

“Notably, capital inflows in the first tranche this September are expected to be relatively modest, at just over $150 million, implying limited short-term impact on actual market liquidity,” said Hung.

While passive fund inflows in the initial phase may be subdued, Hung underscored that the most significant positive development is Vietnam’s formal upgrade, which opens the door to the global institutional investor ecosystem.

He added that within the next year, particularly during the June 2026 and June 2027 review cycles, the probability of Vietnam being added to MSCI’s watch list is very high.

“Once major funds such as Vanguard and global brokerages begin operating more effectively in Vietnam following the FTSE upgrade, this will serve as a critical foundation for MSCI to reassess Vietnam’s status. At that point, MSCI will have little reason to maintain concerns over operational or infrastructure issues as grounds for exclusion,” Hung said.

“Vietnam currently meets approximately 10 out of MSCI’s 18 criteria. With the implementation of a central counterparty clearing system expected around late 2026 to early 2027, the market could satisfy at least three additional key requirements. Importantly, large institutional investors tend to prioritise MSCI indices over FTSE Russell due to significantly larger benchmarked capital. Therefore, inclusion on MSCI’s watch list would provide a much stronger boost in both sentiment and capital inflows.”

Addressing investor concerns over continued net foreign selling despite the upgrade news, Hung emphasised that positive impacts are not absent but rather have yet to materialise.

“Currently, major financial institutions are actively conducting overseas roadshows to connect with international funds that have not yet established accounts in Vietnam. The ongoing net selling trend largely reflects a broader global risk-off sentiment amid rising oil prices and a strong US dollar, affecting most emerging markets, not just Vietnam,” Hung told VIR.

Overall, SSI views the upgrade story as a long-term catalyst, with passive fund disbursements expected to begin in September rather than immediately. The firm advises investors not to sacrifice long-term opportunities for short-term speculative gains driven by upgrade-related news.

“Market reclassification is a gradual process that reshapes how global institutional investors perceive Vietnam,” Hung said. “Focusing solely on short-term volatility risks missing larger opportunities as Vietnam’s financial market integrates more deeply into global standards.”

From the opening minutes of the April 8 trading session, bullish sentiment dominated, reflecting strong investor enthusiasm.

By the mid-day break, 569 stocks had advanced, significantly outnumbering 131 decliners. The VN-Index surged by 58.66 points, or 3.5 per cent, to 1,736.20, while the HNX-Index gained 5.1 points to 251.8.

Market liquidity remained robust, with over 773 million shares traded, equivalent to a total transaction value of over $766.5 million.

Pham Tuyen, director of Brokerage at KIS Vietnam Securities, said the continued monitoring and clear roadmap towards emerging market status represent a pivotal milestone for Vietnam’s equity market.

“This serves as a crucial anchor for investor sentiment, helping ease foreign selling pressure and potentially reversing flows back into net buying,” he said. “The September upgrade timeline reflects the substantial efforts of regulators, including the Ministry of Finance and the State Securities Commission, under the government’s close direction.”

Tuyen added that the rally has fuelled strong capital inflows into previously underperforming sectors such as banking, securities, and especially large-cap stocks within the VN30 basket.

Large-cap names led the rally, with VIC acting as a key driver by contributing 14.54 points to the VN-Index. Other heavyweights such as VHM, VCB, TCB, and BID collectively added more than 13 points, providing a solid foundation for market sentiment.

Capital also flowed into leading stocks including SSI, SHS, VIX, MBB, CTG, and VCB. Notably, HPG saw particularly strong inflows, while MSN and MWG maintained solid gains, helping the VN-Index sustain an increase of nearly 3 per cent.

However, Tuyen cautioned investors to remain prudent: “Despite the market’s strong rally, investors should avoid chasing prices at all costs. Ongoing geopolitical tensions continue to pose unpredictable risks, requiring a more selective and sustainable investment strategy,” he said.

VIR