Vietnam Stocks Join FTSE Emerging Market Indexes, Unlocking Billions in Foreign Investment

Vietnamese stocks officially joined FTSE Russell’s emerging market indexes on Monday, marking a major milestone for Vietnam’s stock market after years of reforms designed to improve market access and attract foreign investment.

FTSE Russell estimates the Vietnam emerging market upgrade could channel as much as $6 billion into Vietnamese equities. The country had been on the index provider’s watchlist since 2018 and now enters an emerging market category that includes major economies such as China and India.

Vietnam’s benchmark stock index initially gained 0.54% on Monday, supported by banking shares, before giving up some of those gains. Expectations surrounding the FTSE upgrade have already helped revive foreign investor interest. Ho Chi Minh Stock Exchange data showed overseas investors purchased a net 2.7 trillion dong ($104 million) of shares last week, although they remain net sellers by roughly 91 trillion dong overall.

Thomas Nguyen, chief global markets officer at SSI Securities Corporation, expects trading interest to moderate after the initial inclusion before strengthening again ahead of future allocation increases.

The FTSE transition will occur in four stages through 2027. Vietnam received an initial 10% allocation in September, followed by another 20% scheduled for March and two 35% tranches in June and September next year. Nguyen said the larger March allocation could produce a more visible impact on the domestic market.

Vanguard also plans to increase its Vietnam investments to approximately $2.5 billion over the coming years following the upgrade.

Challenges remain, particularly foreign ownership limits and restrictions on the free float of certain Vietnamese companies. However, FTSE inclusion has renewed expectations that Vietnam could eventually secure an MSCI emerging market upgrade.

Investors are closely watching the planned introduction of a central counterparty clearing mechanism in 2027, which could help Vietnam meet MSCI’s market-access standards.

“FTSE is about access into the market. MSCI is about scale,” Nguyen said, emphasizing that central counterparty clearing will be critical to Vietnam’s next potential market classification upgrade.