Hanoi (VNA) – FTSE Russell’s mid-term review has reaffirmed that Vietnam remains on track for an upgrade from frontier to secondary emerging market status, paving the way for increased passive and active international capital inflows.
The inclusion of Vietnamese equities in global FTSE indices from this September is expected to improve market liquidity, enhance the country’s global standing, and open up long-term investment opportunities, reflecting the market’s growing maturity and integration.
Bui Van Huy, Deputy General Director of FIDT Investment Consulting and Asset Management JSC, said the March review was largely procedural, confirming progress rather than introducing new decisions. However, it holds long-term structural significance, potentially unlocking 5–6 billion USD in passive inflows from exchange-traded funds (ETFs) tracking FTSE indices.
In the short term, he noted, the impact may be limited as upgrade expectations have already been priced in, while FTSE-linked funds are shrinking in scale. Foreign investors have also maintained net selling amid a global defensive trend since 2024, favouring larger and more stable markets.
Ho Huu Tuan Hieu, an investment strategy expert at SSI Securities Corporation, said most upgrade expectations are already reflected in valuations. The latest review mainly added criteria such as the Global Broker mechanism, while key requirements have largely been met thanks to policy adjustments and market preparations.
SSI views the upgrade as a structural driver, with about 1.67 billion USD in passive ETF inflows expected to be disbursed in phases over several quarters, helping ensure orderly capital absorption.
Reforms such as removing pre-funding requirements, improving disclosure standards, easing foreign ownership limits, and introducing a central counterparty (CCP) clearing mechanism are bringing Vietnam closer to meeting international criteria. While foreign exchange liberalisation remains incomplete, it is not seen as a decisive barrier.
Recent legal instruments and the rollout of the KRX trading system mark important progress in market infrastructure, improving transparency, accessibility and operational efficiency, particularly for institutional investors.
Vice Chairman of the State Securities Commission Bui Hoang Hai said Vietnam was approved for the upgrade on October 8, 2025, with implementation set for this September. The transition will take place over one year, allowing time to determine index weightings and for investors to prepare.
Vietnamese stocks will be added to FTSE indices in four phases from September 2026 to September 2027, with weightings gradually rising from 10% to full inclusion. This roadmap is designed to ensure market stability, manage capital flows and support the non-prefunding mechanism.
Hai stressed that the upgrade is a milestone rather than an end goal, with the broader objective being to enhance the stock market’s role in capital mobilisation and allocation. He further stated that ongoing reforms, from legal frameworks to infrastructure upgrades and transparency standards, aim to enhance investor experience, particularly for institutional investors.
He also highlighted efforts to accelerate the CCP mechanism, with the Vietnam Securities Depository and Clearing Corporation (VSDC) set to establish a subsidiary to operate the system, alongside initiatives to increase the share of institutional investors and improve the quality of financial advisory services.
The SSC noted that while the upgrade may boost investor sentiment, the market inherently carries risks. Thus, investors are advised to exercise caution and conduct thorough research before making decisions to safeguard their interests and to ensure the market operates efficiently, channeling capital to promising businesses and projects, Hai said./.
