Historic turning point of Vietnam's stock market with upgrade decision from FTSE Russell

The decision to upgrade securities is considered by many to be a "historic turning point" for Vietnam's capital market.

In the early morning of October 8, the FTSE Russell rating agency officially announced its decision to upgrade Vietnam's stock market from a frontier market to a secondary emerging market. The FTSE Russell Index Board affirmed that Vietnam has fully met all the necessary criteria according to the FTSE equity country classification framework. This is a historic milestone, marking an important turning point after more than a decade of efforts to reform and improve Vietnam's capital market.

Trading boom

Immediately after the above information was announced, the Vietnamese stock market reacted enthusiastically. In just the first 15 minutes of matching orders, a series of stocks increased sharply, pushing the VN-Index past the 1,700 point mark.

Although profit-taking pressure appeared immediately afterward, causing the market to slow down, domestic cash flow returned strongly at the end of the session, helping the index close at 1,697 points, up more than 12 points compared to the previous day. Market liquidity also skyrocketed, reaching more than VND34,000 billion, showing investors' confidence and great expectations. Notably, foreign investors suddenly reversed their net buying of more than VND156 billion, after a long streak of continuous net selling since the beginning of the year.

Vietnam's stock market has officially been upgraded from frontier to secondary emerging after more than 8 years of pursuit. Photo: LAM GIANG

On investment forums, the topic of "stock upgrading" has become the focus of discussion. Many investors believe that this is a historic moment and could open a "new wave" for the Vietnamese stock market. Mr. Le Quang Nhat, an investor in Ho Chi Minh City, excitedly said: "As soon as there is official news of the upgrade, I will deposit more money to buy bank and securities stocks. I believe this will be the group that foreign funds will pay the most attention to in the coming period."

Maybank Securities Company assessed FTSE Russell's decision to upgrade Vietnam's securities as a "historic turning point" for the capital market. "This is not only a strong boost for the market but also a recognition of the Vietnamese Government 's consistent reform efforts in perfecting mechanisms, opening up the capital market and creating favorable conditions for foreign investors" - Maybank's expert team commented.

Phu Hung Securities Company (PHS) believes that this event will open a new development cycle for the Vietnamese capital market. When investor confidence is strengthened, the cost of capital for businesses decreases, the ability to mobilize foreign capital becomes easier, thereby supporting economic growth.

Upgrading the stock market also helps Vietnam become more attractive to international investors, both in indirect capital flows (through stocks and bonds) and direct capital flows (FDI). Thanks to that, foreign borrowing costs can be reduced, exchange rates can be controlled more stably, contributing to the realization of the Government's double-digit growth target for the 2026-2030 period.

Mr. Nguyen The Minh, Director of Analysis for Individual Clients - Yuanta Vietnam Securities Company, said that the positive impact after the upgrade is not only in the reduction of net selling by foreign investors, but also in the possibility of promoting the return of the IPO (initial public offering) wave. "Recently, foreign investors have sold a lot and reduced their holdings. When Vietnamese stocks are upgraded, they will have the need to buy back to restructure their portfolios. This is an opportunity for Vietnam to promote more large enterprises to IPO, list shares, and welcome the return of foreign capital," Mr. Minh analyzed.

Foreign capital will explode

According to FTSE Russell, the decision to upgrade Vietnam’s stock market is being made under the Official Review (OBR) process based on the FTSE Equity Country Classification Framework. The upgrade will officially take effect from September 2026, subject to the results of the interim review in March 2026. The implementation process will be carried out in several stages and with consultation with relevant parties to ensure stability.

According to Dr. Nguyen Anh Vu, lecturer at the Banking University of Ho Chi Minh City, the upgrade helps Vietnamese securities attract strong attention from international investment funds, especially ETFs tracking emerging market indexes. "This is an opportunity to increase the brand reputation of the Vietnamese economy on the global financial map. The positive impact on the macro economy will come gradually, mainly through listed enterprises accessing foreign capital to expand their business activities," Mr. Vu said.

However, Dr. Vu also warned that some countries, after being upgraded, have witnessed speculation, causing the market to overheat and then adjust sharply. "Many markets have been demoted back to the frontier group after the upgrade. Vietnam needs to be careful to avoid repeating that scenario," Mr. Vu recommended.

Mr. Gary Harron, Head of Securities Services - HSBC Vietnam, informed that within 6 months since the latest report of FTSE Russell, he has witnessed a strong and unified spirit of cooperation between relevant agencies, foreign investors and market participants to remove the final barriers to the upgrade. In addition, the Vietnamese management agency has announced a plan to aim for the "emerging market" classification of MSCI (a more stringent rating organization than FTSE Russell) by 2030, opening up the expectation of receiving more large-scale international capital flows.

"Vietnam's capital market has made great strides in both quantity and quality. Market capitalization and the number of trading accounts have increased more than sevenfold in a decade. This year alone, the VN-Index increased by more than 30%, surpassing the peak of the COVID-19 pandemic when confidence in Vietnam's role in the global supply chain was at its highest level," said Mr. Harron. According to forecasts from HSBC's Global Investment Research Department, Vietnam could attract between 3.4 billion and 10.4 billion USD in foreign capital after the official upgrade.

Mr. Tran Hoang Son, Director of Market Strategy - VPBank Securities Company, commented that the securities upgrade is a turning point to help Vietnam integrate more deeply into the global financial system. The reality of Saudi Arabia and Kuwait shows that active and passive capital flows can flow into Vietnam 3 - 7 billion USD after the upgrade decision takes effect.

According to Mr. Son, removing the pre-funding regulation (depositing money before trading) will help attract institutional investors, increase daily transaction value to 2-3 billion USD, improve liquidity and reduce market volatility. "Larger capital flows will support businesses to promote IPOs, expand capitalization scale and help the stock market become an effective capital mobilization channel, contributing to the GDP growth target of more than 8% in 2025 and reaching double digits in the period of 2026-2030" - Mr. Son emphasized.

Continue to innovate more deeply

The State Securities Commission (SSC) assessed that FTSE Russell's announcement to upgrade Vietnam's stock market reflects the results of a comprehensive and sustainable reform process in line with the Party and State's orientation to build a transparent, modern, effective and internationally integrated stock market. According to the SSC, this is just the beginning of a new development phase, requiring further in-depth innovation to achieve long-term goals.

"As a regulator, we will work closely with FTSE Russell to ensure the official transition takes place on schedule. The State Securities Commission is committed to continuing to improve the legal framework, modernize infrastructure, and comprehensively digitize, creating maximum conditions for domestic and foreign investors to access the Vietnamese market. The goal is to make the Vietnamese stock market a reliable, transparent, and competitive destination in the region as well as globally," the State Securities Commission representative affirmed.

S. Nhung

Source: https://nld.com.vn/buoc-ngoat-lich-su-cua-chung-khoan-viet-nam-196251008221415105.htm