Upgrading stock market opens up new capital flows for Viet Nam

The reclassification reflects years of reforms to improve market accessibility for foreign investors and bring Viet Nam's stock market closer to international practices.

A milestone for Viet Nam's stock market

Reuters described the reclassification as a "milestone" for Viet Nam's stock market following years of reforms aimed at attracting foreign investment. FTSE Russell estimates that the move could channel up to US$6 billion into Vietnamese equities as global funds adjust their portfolios.

Viet Nam was placed on FTSE Russell's watchlist for potential reclassification in 2018. The upgrade from frontier-market status to secondary emerging-market status became effective on September 21, 2026.

The move has already generated increased interest among foreign investors. Reuters reported that overseas investors made net purchases of VND2.7 trillion (about US$104 million) in Vietnamese shares during the week from September 14-18, although foreign investors remained net sellers for the year as a whole.

International media have also highlighted the market reforms underpinning the reclassification.

Singapore's The Business Times focused on improvements in foreign investors' access to the Vietnamese market, particularly the development of a "global broker" framework and the removal of the requirement for foreign investors to fully pre-fund stock transactions.

According to the newspaper, FTSE Russell has positively assessed Viet Nam's progress in implementing the global broker framework, which allows foreign institutional investors to trade through international brokerage firms. Regulatory agencies, securities companies, custodian banks and investment organizations have agreed on key operational components, with further work focusing on bilateral arrangements between global and domestic brokerage firms.

The reforms are part of Viet Nam's broader efforts to develop the stock market as an increasingly important channel for medium- and long-term capital, supplementing traditional sources of financing for the economy.

Expectations for new capital inflows

The potential scale of capital inflows following the reclassification has been a major focus of international media coverage.

Reuters reported that Vanguard expects to increase its investment exposure to Viet Nam to approximately US$2.5 billion over the coming years. The inclusion of Vietnamese stocks in FTSE Russell's indexes will be carried out in four phases through 2027, allowing index-tracking funds to gradually adjust their portfolios and helping reduce market disruption.

Under the phased process, Vietnamese equities will initially receive a 10 percent inclusion weight, followed by 20 percent in March 2027 and 35 percent in each of June and September 2027.

Channel NewsAsia also highlighted the potential for billions of US dollars in foreign capital to flow into Viet Nam. It noted that reforms, including the removal of full pre-funding requirements for foreign investors, have brought market practices closer to international standards, reduced counterparty risk and strengthened investor confidence.

CNA cited estimates that the reclassification could generate capital inflows of around US$3.5-5 billion.

Malaysia's The Star viewed the move from the perspective of market reaction and international investor confidence, quoting an HSBC representative as saying that FTSE Russell's reclassification sends a positive signal to global investors about the resilience of Viet Nam's economy amid short-term trade pressures.

Thailand's Bangkok Post, in an article published on September 21, described the official inclusion of Vietnamese stocks in FTSE Russell's global equity indexes as an important milestone, recognizing the progress made through extensive reforms to improve market competitiveness and attract foreign indirect investment.

The newspaper also cited FTSE Russell's estimate that the reclassification could bring up to US$6 billion in capital into Viet Nam. Thomas Nguyen, Head of Global Markets at SSI Securities Corporation, said the transition and integration into FTSE Russell's indexes would be implemented in four phases through 2027.

As Viet Nam moves toward the next stage of index integration in March 2027, when the inclusion weight will increase to 20 percent, the impact of the reclassification on foreign capital flows and the domestic stock market is expected to become more visible. /.