FTSE upgrade review may bring 30 Vietnamese stocks into global index basket

FTSE upgrade review may bring 30 Vietnamese stocks into global index basket

Based on market data as of July 31, MBS estimated that approximately $1.5 billion from passive funds tracking FTSE indices would be allocated during the September rebalancing.

Traders work in a trading room of a securities firm. — VNA/VNS Photo

Up to 30 Vietnamese stocks could be included in the FTSE Global Equity Index Series (FTSE GEIS) when Việt Nam is officially promoted to Secondary Emerging Market status in September, according to projections by MB Securities (MBS).

FTSE Russell is scheduled to announce the official constituent list for its emerging market indices on August 21, with the changes taking effect on September 21, coinciding with Việt Nam's official inclusion in the FTSE emerging market universe.

Based on market data as of July 31, MBS estimated that approximately $1.5 billion from passive funds tracking FTSE indices would be allocated during the September rebalancing. The inflows are expected to focus primarily on large-cap Vietnamese equities.

Among individual stocks, Vingroup (VIC) is forecast to receive the largest inflow, with estimated net purchases of around $46.4 million, equivalent to roughly 1.19 per cent of its average trading value over the previous 10 sessions.

Vinhomes (VHM) is expected to attract around US$16 million, while Masan Group (MSN) and SHB could each receive approximately US$9.2 million. SSI Securities is projected to see inflows of about US$7.5 million.

According to MBS, FTSE Russell plans to distribute passive capital into the Vietnamese market in four phases over a one-year period, beginning with the September 2026 review and concluding in September 2027.

During the September 2026 review, when Việt Nam officially joins the FTSE GEIS Emerging Market Index and exits the FTSE Frontier Index, passive exchange-traded funds (ETFs) are expected to allocate around 10 per cent of the total projected inflows, equivalent to approximately $140-150 million.

The second phase is scheduled for the March 2027 semi-annual review, when the allocation is expected to increase to 20 per cent, representing around $300 million.

Another 35 per cent, or approximately $525 million, is projected to be invested during the June 2027 review.

The final 35 per cent, also valued at roughly $525 million, is expected to be deployed in the September 2027 review.

MBS said the final stage would likely see stronger purchases of mid-cap and small-cap stocks, while large-cap shares would have been accumulated progressively through the earlier allocation phases.

The securities firm noted that ETF managers would purchase constituent stocks according to their respective weightings in the FTSE index at each rebalancing period.

Following every review, FTSE Russell might make minor adjustments to index weightings after assessing the actual deployment of passive funds.

As a result, large-cap stocks with higher index weightings were expected to attract sustained buying across multiple review periods to minimise market impact. 

In contrast, mid-cap and small-cap stocks, which carry lower index weights and generally require smaller investment volumes, were expected to see more concentrated purchases during the later phases, when their transactions were less likely to disrupt overall market trading. 

Bizhub