Hanoi (VNA) – Vietnam’s upgrade from a frontier market to a secondary emerging market under FTSE Russell’s classification will officially take effect on September 21, marking an important milestone while placing new requirements on the country to further improve its institutions and market infrastructure, facilitate foreign investors’ access and enhance the quality of governance and information disclosure by listed companies.
The next steps following the upgrade were clearly outlined in the securities market upgrade scheme, which took effect in September 2025, Vice Chairman of the State Securities Commission (SSC) Bui Hoang Hai told the Vietnam News Agency (VNA).
The SSC will first review legal measures to facilitate greater foreign investor participation, particularly regulations on foreign ownership limits. The commission will work towards removing the 50% foreign ownership cap applicable to certain conditional business sectors, while ministries and sectors will review relevant regulations with a view to reducing restricted sectors to only those genuinely related to national defence and security. Administrative procedures for foreign investors to open securities accounts will also be streamlined.
Regarding infrastructure, Hai said Vietnam will introduce a central counterparty (CCP) mechanism for the stock market and continue upgrading the KRX information technology system to accommodate higher liquidity. The straight-through processing (STP) system linking global custodian banks with domestic securities companies, as well as connections among market members, securities firms and custodian banks, will also be expanded and upgraded.
In addition, the management agency will further develop new trading mechanisms and services for foreign investors, including omnibus accounts at banks and tools to hedge against exchange-rate risks.
For listed companies, the official stressed the need to improve corporate governance, transparency and information disclosure in English language. He also encouraged companies that are not actually operating in foreign ownership-restricted sectors but have registered such business lines to convene shareholders’ meetings to remove those unnecessary business lines from their registrations, thereby facilitating foreign investment.
He said the management agency will also strengthen investor training programmes while enhancing market supervision and surveillance. Two major IT projects, including an industry-wide securities database and a market surveillance system, are expected to improve the efficiency of market management.
Regarding the challenge of maintaining the upgraded status, Hai said Vietnam will continue improving market transparency and efficiency. The SSC and the Ministry of Finance are working on the implementation of the CCP mechanism, preparing new trading mechanisms, reviewing foreign ownership limits, strengthening market supervision and maintaining investor confidence.
On FTSE Russell’s four-stage roadmap for incorporating Vietnamese stocks into global indices, the SSC Vice Chairman stressed that the number of stages varied among markets, with some completing the process in two or three stages. However, the total weighting allocated to a market’s stocks is generally completed within a maximum of one year. Vietnam’s four-stage approach reflected a relatively cautious assessment of market conditions, liquidity and foreign investors’ expectations.
Under the roadmap, Vietnam is scheduled to introduce the CCP mechanism in 2027 to facilitate smoother settlement of transactions. The weighting of Vietnamese stocks is set to rise from 10% in the first allocation to 20% in the second, 35% in the third and another 35% in the fourth. Hai said the second allocation, scheduled for March 2027, will therefore bring passive investment funds into Vietnam at twice the weighting of the first allocation. He added that the global growth in passive investment in emerging markets could also lead to a higher absolute amount of capital flowing into Vietnam.
He also highlighted the importance of strengthened supervision during index rebalancing periods, saying this will help maintain market discipline and reinforce confidence among both domestic and foreign investors by ensuring that stock prices properly reflect companies’ underlying value.
According to Hai, companies seeking to benefit from the upgrade should pay particular attention to foreign ownership limits, free-float ratios, corporate governance and information disclosure quality. Excessive ownership concentration can reduce the number of shares accessible to foreign investors, while shortcomings in governance and transparency can affect companies’ attractiveness to global investors.
With the market increasingly open to international capital, the SSC Vice Chairman assessed that the ability to attract investment will depend not only on regulatory efforts but also on the internal strength of individual companies. He therefore urged listed businesses to improve ownership structures, governance, information disclosure and transparency in order to make full use of the opportunities created by Vietnam’s market upgrade./.
VNA
