Hanoi (VNA) – Vietnam’s stock market is entering a new phase after FTSE Russell confirmed in its March 2026 interim review that the country will be upgraded to Secondary Emerging Market status. The new status would be gained through a phased process beginning in September 2026.
The long-awaited decision marks international recognition of Vietnam’s efforts to improve market regulations and trading infrastructure. While the upgrade is expected to attract billions of dollars in foreign capital, experts said the greater challenge lies in ensuring the domestic market can absorb the inflows and sustain long-term growth.
Capital inflows expected to come gradually
Rather than implementing the upgrade at once, FTSE Russell will complete the process in four stages between September 2026 and March 2027.
Pham Luu Hung, Chief Economist and Director of Research and Investment Advisory at SSI Securities Corporation (SSI Research), estimated that Vietnam could receive about 1.67 billion USD in index-related capital, with actual inflows in the initial phase reaching around 1.52–1.53 billion USD.
The first round of index rebalancing on September 21 is expected to bring roughly 150 million USD into the market.
Although modest compared with current market liquidity, Hung said the first inflow would carry strong symbolic value by signalling Vietnam’s entry into the global emerging markets.
Tran Thi Thanh Nhan, an analyst at Maybank Securities, described the market upgrade as a potential "liquidity inflection point." She estimated that, over time, passive investment funds together with allocations from active funds could bring between 6 - 8 billion USD into Vietnam.
She added that FTSE Russell's decision to extend the upgrade over four phases would allow the market to absorb new capital more smoothly, reducing the risk of excessive price swings or liquidity shocks.
Not all analysts, however, expect an immediate turnaround.
Nguyen Duc Khang, Head of Research at Pinetree Securities, cautioned investors against viewing the market upgrade as a "magic wand."
He noted that passive funds tracking FTSE indices are expected to inject only around 600–800 million USD, equivalent to 15–20 trillion VND, a relatively small amount compared with the more than 125 trillion VND in net foreign selling recorded in 2025 and another 30 trillion VND withdrawn during the first months of 2026.
According to Khang, while passive funds must buy Vietnamese stocks after the upgrade, much larger actively managed funds remain cautious amid global interest rate differences, exchange rate volatility and economic uncertainty.
Their return, he said, will depend more on macroeconomic fundamentals, including listed companies' earnings prospects, exchange rate stability and the availability of more high-quality listed firms.
Reform remains the key
Experts stressed that the market upgrade is not just about capital inflows; more importantly, it is about a fundamental transformation in infrastructure quality and regulatory mindset.
Ho Huu Tuan Hieu, an investment strategist at SSI Securities, said the FTSE upgrade should be viewed as an important milestone rather than the final destination. Vietnam's longer-term objective remains inclusion in the MSCI Emerging Markets Index, which tracks significantly larger investment assets.
A key reform is the planned introduction of the Central Counterparty Clearing (CCP) mechanism, designed to remove the long-standing pre-funding requirement that has discouraged many institutional foreign investors.
Hung said that if the CCP system is introduced as scheduled by late 2026 or early 2027, Vietnam could satisfy at least three additional MSCI criteria. The market currently meets about 10 of MSCI's 18 assessment criteria.
Progress has also been made in easing foreign ownership limits in selected sectors, including aviation and banking, while listed companies have improved English-language information disclosure.
Hung expressed his confidence that Vietnam could be placed on MSCI's watchlist in 2026 or 2027 as international institutional investors increase their exposure to the market.
Analysts also noted that meeting FTSE Russell's requirements demonstrate the reliability of Vietnam's upgraded trading infrastructure and addresses many operational concerns previously raised by global investors.
Nevertheless, the stock market remains closely linked to broader economic conditions. External factors, including fluctuations in global financial markets, geopolitical tensions and commodity prices, continue to pose risks.
Domestically, policies aimed at boosting consumption, accelerating public investment disbursement and reforming personal income tax are expected to strengthen corporate earnings and support market growth.
Looking ahead, experts believed the market upgrade will encourage a more professional investment culture, with greater emphasis on company fundamentals, data analysis and transparency rather than short-term speculation.
They said maintaining reform momentum, improving market transparency and expanding the supply of quality listed companies will be essential for retaining foreign capital and transforming Vietnam's upgraded market status into sustainable economic growth.
The FTSE Russell upgrade also reflects Vietnam's commitment to deeper integration into global financial markets and is expected to strengthen the country's position as an increasingly attractive destination for international investors./.
