Vietnam's stock market officially upgraded to emerging market status

On October 8 (at 3:00 a.m. Hanoi time), FTSE Russell, a market rating organization, announced that Vietnam's stock market had met all official criteria and was upgraded from a frontier market to a secondary emerging market.

Customers transact at Bao Viet Securities Company's headquarters in Hanoi . Photo: Tran Viet/VNA

Will work closely with FTSE Russell to ensure the transition is on track.

Vietnam is classified as a Frontier market and has been on the Watch List since September 2018 for consideration of upgrading to Secondary Emerging market.

When being put on the watch list, Vietnam did not meet 2 criteria: “Payment cycle (DvP)” and “Method - Cost of processing failed transactions”, both of which were rated at “Restricted”.

By November 2024, the Vietnam Securities Market Authority had implemented a non-prefunding trading model, allowing domestic securities companies to secure the necessary capital to support foreign institutional investors in executing securities purchase orders. This has officially eliminated the pre-prefunding requirement for foreign institutional investors. In addition, a formal process for handling failed transactions has also been established.

The FTSE Russell Index Governing Board (IGB) recognises the achievements of the Vietnamese market regulator in developing its market, and confirms that Vietnam now meets all the criteria to be classified as a Secondary Emerging market under the FTSE Equity Country Classification Framework.

The IGB Board has carefully considered feedback from FTSE Russell’s Advisory Committees regarding the restrictions on the role of global brokers in trading activities in Vietnam. While the use of a global broker as the sole counterparty is not a mandatory condition for upgrading to Secondary Emerging market status, the IGB recognises that index investors should be able to “mirror the index” under the second principle of the Statement of Principles.

Given the importance of the above issue to index investors, IGB determined that addressing the role of global securities companies in trading activities is necessary for the upgrade process to be implemented. FTSE Russell acknowledged the current efforts of the Vietnam Securities Market Management Authority in building a model that allows foreign institutional investors to trade through partners who are global securities companies. This effort is expected to bring the Vietnamese market closer to international standards, minimize counterparty risks and increase investor confidence through establishing relationships with reputable intermediaries.

The IGB Board confirmed; and announced the decision to upgrade Vietnam from Frontier to Secondary Emerging, with an expected effective date of Monday, September 21, 2026, with a mid-term review taking place in March 2026. This timetable is designed to assess progress in expanding the role of global securities firms, a key element in the index modelling and meeting the needs of the international investment community. The upgrade of Vietnam to Secondary Emerging is expected to be implemented in phases.

FTSE Russell will continue to monitor market developments closely and encourage stakeholders to provide feedback ahead of the March 2026 mid-term review to ensure the upgrade is implemented on schedule in September 2026. Details of the phased implementation plan will be published in the March 2026 announcement following consultation with FTSE Russell’s Advisory Committees and market participants.

A representative of the State Securities Commission (SSC) said that this event is an important milestone marking the strong development of the Vietnamese stock market, recognizing the comprehensive reform efforts in recent times of the entire securities industry in accordance with the Party and State's policies to develop a transparent, modern, and effective stock market according to the highest international standards.

The results were achieved thanks to the strong direction of the Government, the Prime Minister, the Ministry of Finance ; the close coordination of the State Bank and relevant ministries and branches; the support of the Stock Exchanges, VSDC, market members, news agencies, and the press; as well as the valuable support from the World Bank, FTSE experts and global investment institutions.

“The upgrading of Vietnam's stock market to a secondary emerging market is the beginning of a new development phase, requiring deeper and broader reforms to achieve long-term goals in the future,” said a representative of the State Securities Commission.

As the State management agency of securities and the stock market, the State Securities Commission will continue to closely coordinate with FTSE Russell to ensure the official transition process follows the roadmap.

“The State Securities Commission is committed to continuing to implement comprehensive solutions to create maximum conditions for domestic and foreign investors to access the market; at the same time, perfecting the legal framework, modernizing and digitizing the infrastructure, aiming to develop the Vietnamese stock market to be increasingly transparent and effective, promoting deeper integration into the global financial market,” informed a representative of the State Securities Commission.

Effective capital support for the economy and medium and long-term capital markets

Deputy Minister of Finance Nguyen Duc Chi. Photo: VGP

At the recent regular press conference of the Ministry of Finance for the third quarter, Deputy Minister of Finance Nguyen Duc Chi emphasized: Vietnam has been implementing many synchronous solutions to develop the stock market in a sustainable, stable and transparent manner. This is an important requirement in implementing the approved strategy for developing the capital market and the stock market.

In recent times, the stock market has clearly demonstrated its correct operation. The National Assembly has issued amended and supplemented laws; the Government has issued many decrees; the Ministry of Finance has issued circulars; the State Bank has also coordinated to issue relevant documents. Thanks to that, the legal framework has been increasingly improved, creating a foundation for sustainable development.

"Upgrading is not a one-time goal, but a continuous process that needs to be maintained in the long term. The ultimate goal is to develop a stable and transparent stock market; at the same time effectively supporting the economy, businesses and medium- and long-term capital markets," Deputy Minister Nguyen Duc Chi affirmed.

Billions of dollars are waiting to flow into Vietnam's stocks after the upgrade.

Previously, VNDirect estimated that if upgraded to a secondary emerging market by FTSE Russell, Vietnam could attract foreign capital flows of about 1.0 - 1.5 billion USD from open-end funds and ETFs tracking the FTSE index.

According to the roadmap, 2026 will be an important period when foreign investor ownership limits are loosened, and the market begins to pilot intraday trading, selling pending securities and short selling.

By early 2027, when the central counterparty (CCP) clearing mechanism is implemented, MSCI (an American financial company specializing in providing stock indexes and portfolio analysis tools, best known for its benchmark indexes) is also expected to officially upgrade Vietnam's stock market to the emerging market group.

Source: https://baotintuc.vn/thoi-su/chung-khoan-viet-nam-chinh-thuc-duoc-nang-hang-len-moi-noi-20251008044807603.htm