FTSE Russell upgrades Vietnam to emerging market status

The Vietnam stock market regulator expects FTSE Russell’s long-awaited confirmation of the country’s emerging market status to draw significant foreign capital back to a market that has faced steady selling pressure. The State Securities Commission announced that the reclassification will help attract large-scale international investment and strengthen the nation's position within the global financial system. > It contributes to attracting large-scale international investment flows, enhancing liquidity, and strengthening Vietnams position in the global financial system. FTSE Russell announced it will upgrade the country from frontier to emerging market status in September, beginning a phased inclusion into its global equity indexes. The index provider estimates this shift could redirect up to $6 billion into the market, which has been on the watchlist since 2018 alongside nations such as China and India. Analysts from MAYBANK SECURITIES THAILAND expect foreign capital to build progressively ahead of the inclusion. They project passive inflows could be accompanied by active allocations totaling as much as $8 billion. > The phased implementation should enable orderly absorption while supporting a steady improvement in market liquidity and depth. Foreign investors have been net sellers of Vietnamese equities recently, with outflows from the Ho Chi Minh Stock Exchange reaching approximately $1.2 billion so far this year, following $5 billion in net outflows in 2025. FTSE Russell predicts that the new capital could give the market a weighting of up to 0.35% in its emerging market index. Potential inclusions for the index include VINGROUP JSC, MASAN GROUP CORP, FPT CORP, and HOA PHAT GROUP JSC. The index compiler expects approximately $1.5 billion in passive inflows, with 10% added this September, followed by 20% in March and 35% in both June and September of next year. While the country has been on the watchlist for eight years, market experts note that serious reforms only gained momentum in 2022 after turbulence in the bond and property sectors. Looking ahead, the government is also targeting an upgrade from MSCI INC by 2030. While foreign ownership limits remain a primary hurdle for this goal, some analysts suggest that the current pace of reform by the finance ministry could see an upgrade as early as 2028.