Photo: Reuters — Ho Chi Minh Stock Exchange (HOSE) — Vietnam's financial hub
What is the FTSE Upgrade?
FTSE Russell is an international organization that classifies global stock markets into 4 tiers: Developed, Advanced Emerging, Secondary Emerging, and Frontier. Vietnam is currently classified as Frontier. Upgrading to Secondary Emerging Market means hundreds of international investment funds — including major ETFs tracking the FTSE Emerging Markets index — will automatically need to buy Vietnamese stocks based on new weightings. Amid the recent VN-Index crash and infrastructure growth like the Da Nang Lien Chieu port, this is a watershed moment for Vietnam's capital market.
7 Years in the Making
Since 2018, Vietnam has continuously worked to reform its capital market to meet FTSE Russell standards. This journey was not easy — the COVID-19 pandemic, regulatory barriers, and complex technical requirements delayed the process multiple times.
$2-5 Billion Capital Inflows
Upon upgrade, Vietnam will be included in the FTSE Emerging Markets index — one of the world's most tracked indices with estimated total AUM exceeding $1.8 trillion. With an initial weighting of approximately 0.5-1.0%, estimated passive flows of $2-5 billion will enter Vietnam's market in the first 12-18 months post-upgrade.
Most Affected Stocks
Large-cap stocks with high liquidity and significant free-float ratios will be included in the FTSE Emerging Markets basket. Below are the stocks expected to benefit the most:
| Ticker | Company | Sector | Est. Weight |
|---|---|---|---|
| VNM | Vinamilk | Consumer | 8.2% |
| VHM | Vinhomes | Real Estate | 7.5% |
| VIC | Vingroup | Conglomerate | 6.8% |
| HPG | Hoa Phat | Steel | 5.9% |
| FPT | FPT Corp | Technology | 5.4% |
| MBB | MB Bank | Banking | 4.7% |
| VCB | Vietcombank | Banking | 4.3% |
| MSN | Masan Group | Consumer | 3.8% |
Requirements Met
FTSE Russell evaluates markets based on criteria covering infrastructure, clearing & settlement, foreign investor access, and information transparency. Vietnam has completed all 6 key criteria:
▸ If you invest in VN-Index stocks, the expected $1.5–2B foreign capital inflow post-upgrade could push VN-Index up 10–15% within 12 months — roughly 150–200 points.
Central Counterparty (CCP)
CompleteVSD has operated the CCP system since March 2025, meeting FTSE Russell requirements
Foreign Ownership Limit (FOL)
CompleteDecree 155 allows unlimited foreign purchases via Non-Voting Depository Receipts (NVDRs)
Prefunding Requirement
RemovedForeign investors no longer need 100% cash deposit before placing buy orders
T+2 Settlement
CompleteSettlement cycle shortened from T+2.5 to international standard T+2
Pre-trade Registration
RemovedPre-trade registration requirement for foreign investors eliminated
English Disclosure
CompleteMajor listed companies now publish financials and material info in English
Comparison With Other Upgrades
History shows that markets upgraded from Frontier to Emerging all experienced strong growth periods driven by new capital flows. Below is a comparison with recent cases:
| Country | Year | Inflows | Impact |
|---|---|---|---|
| Saudi Arabia | 2019 | $20B+ | Tadawul rose 7% in 6 months |
| Kuwait | 2020 | $3.5B | Market rose 20% in upgrade year |
| Argentina | 2019 | $2.5B | Strong inflows despite political instability |
| Romania | 2020 | $2B | BET Index rose 15% in 12 months |
| Vietnam (expected) | 2025 | $2-5B | VN-Index target 1,500+ |
Expert Analysis
The upgrade will open a new wave of investment from global ETFs tracking the FTSE Emerging Markets index, estimated at $2-5 billion in the first 12-18 months.
Stocks with high free-float ratios and strong liquidity such as FPT, VNM, HPG will benefit the most from new foreign capital flows.
Vietnam has completed all necessary criteria. The final decision will be announced during the April 2025 review.
The upgrade is not just a short-term story — it's a structural change, elevating Vietnam's capital market to the international stage.
VN-Index Impact
Analysts and research institutions outline 3 scenarios for the VN-Index in the 12 months following the upgrade. All scenarios indicate significant growth potential from current levels.
Successful upgrade + strong foreign inflows + 7%+ GDP growth
Upgrade on track, gradual inflows following rebalancing schedules
Upgrade delayed or unfavorable global macro environment
Note: Actual impact depends on multiple factors including global macroeconomic conditions, Fed monetary policy, fund deployment pace, and domestic economic developments. Investors should adopt long-term strategies rather than chasing short-term waves.
▸ If you hold $4,000 worth of VN-30 stocks, the base scenario (+15%) means your portfolio could gain ~$600 within 12 months post-upgrade.
What Happens Next?
Decision Announcement
FTSE Russell officially announces the review results. If approved, Vietnam enters the transition roadmap.
Transition Begins
Vietnam is added to the FTSE Emerging Markets index with initial weighting. Funds begin buying.
Transition Complete
Full weighting applied. Passive flows peak during the rebalancing period.
Long-term Impact
Market liquidity improves, more active funds participate, companies raise governance standards.
References
Frequently Asked Questions
Photo: ZestLab Archive
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