FTSE Russell upgrades Vietnam's stock market

Billions of dollars in investment capital are expected to flow into Vietnam's stock market after the upgrade from FTSE.

Electronic board displaying Vietnam stock indexes - Photo: QUANG DINH

According to Bloomberg News in the early morning of October 8 (Vietnam time), the rating agency FTSE Russell said that Vietnam will be upgraded to the secondary emerging market group, along with countries such as China, India, Indonesia and the Philippines. The upgrade from a frontier market will officially take effect from September 21, 2026.

Vietnamese securities upgraded

"Vietnam's reclassification reflects the implementation of important improvements in market infrastructure," David Sol, global head of policy at FTSE Russell, said in a statement.

Vietnam has been on FTSE Russell's watch list for an upgrade since September 2018, and in recent years, authorities have carried out many extensive reforms to approach international standards, according to Bloomberg.

FTSE is scheduled to re-evaluate Vietnam in March next year. The organization estimates that the upgrade could help Vietnam attract up to $6 billion in foreign investment diversion.

FTSE Russell will closely monitor developments and take into account stakeholder feedback ahead of the March 2026 review, to ensure the upgrade can take place half a year later. The detailed upgrade roadmap will be announced by the organization during the March 2026 review.

Speaking at a press conference on the UK-Vietnam Business Summit on October 7, Mr. Tim Evans, General Director of HSBC Vietnam, said that FTSE's upgrading of Vietnam's stock market is a very positive step forward, as the transaction value on the market has exceeded 3 billion USD.

According to HSBC's forecast, in the first 6 months after the upgrade, passive investment capital flows into the market could increase by 1.5-2 billion USD, while active investment capital flows could be higher.

"Typically, when other markets are upgraded from 'frontier' to 'emerging', such as Saudi Arabia, Kuwait or Pakistan, within two years, the amount of direct investment often increases 5-7 times," Mr. Evans said, expecting a similar scenario to happen with Vietnam.

Mr. Evans added that Vietnam has a more attractive and dynamic economic picture than Kuwait or Pakistan, and the FTSE upgrade will pave the way for MSCI to consider upgrading Vietnam next year.

According to Reuters, HSBC estimated in September that Vietnam could account for 0.5% of the weight in the FTSE Emerging Market Index.

The World Bank also forecasts that short-term capital flows of about 5 billion USD will flow into Vietnam before and after the upgrade, from both active and passive investors.

The focus of the whole year 2025

The upgrade event is considered the focus of the stock market in October and this year. This is also what the Government , management agencies, market members, and investors have expected since being included in the FTSE ranking list since 2018.

According to experts, the current FTSE or MSCI stock market rankings in the future will help large investment funds in the world balance their portfolios and orient their cash flows.

SHS Securities analysts expect foreign capital flows to come from passive and active investment funds.

Of which, the total capitalization of the entire Vietnamese stock market is currently about 365 billion USD. The proportion is about 0.6% in FTSE Asia and 0.5% in FTSE EM. About 1.5-2 billion USD of capital flow will come from passive funds, mainly from funds tracking FTSE EM and FTSE Global ex US. Estimated capital flow from active funds can range from 2-3 billion USD.

Total capital flow is expected to be about 5-7 billion USD distributed back to the Vietnamese stock market.

However, SHS noted that the total net selling value of foreign investors from 2020 to now has been equivalent to 10 billion USD. In addition, SHS experts said that in the short term, even though it has been officially announced, it will not take effect immediately but will take effect in March 2026.

In the short term, in October 2025, some large-cap stocks may benefit when the market receives news when the upgrade information is officially announced and organizations will estimate which Vietnamese stocks can be included in the investment portfolios of funds. Stocks that are likely to be bought when the upgrade is officially announced include: VIC, HPG, VNM, MSN, STB, SSI...

According to the latest figures from FTSE Russell, by the end of 2024, about $18.1 trillion in global investment assets will be used by funds to benchmark against the indexes created by this organization. Of these, trillions of dollars belong to passive investment funds (ETFs) - a group of funds that automatically allocate capital according to the proportion of countries in the index basket published by FTSE.

These figures demonstrate the enormous influence of FTSE Russell in classifying markets and directing international capital flows. As one of the world’s two leading rating agencies (alongside MSCI), FTSE’s classification decisions are not only symbolic, but also have a strong practical impact on foreign investment flows into newly upgraded markets.

NGHI VU - BINH KHANH

Source: https://tuoitre.vn/ftse-russell-nang-hang-chung-khoan-viet-nam-20251007232313023.htm