The country is set to be reclassified as a secondary emerging market by global index provider FTSE Russell in September 2026
[HO CHI MINH CITY] Vietnam has achieved a significant milestone in its financial development with FTSE Russell’s announcement of the reclassification of the country’s stock market from frontier to secondary emerging market status.
Following the phased inclusion starting from Sep 21, 2026, Vietnam will be positioned alongside its Asean peers such as Indonesia and the Philippines, while ranking behind advanced emerging markets such as Thailand and Malaysia, as well as developed ones like Singapore.
Below are key points investors should know about this new emerging market, which is expected to attract billions of dollars in foreign investment following the index inclusion in the coming years.
Overview
Vietnam’s stock market comprises three primary exchanges:
– Ho Chi Minh Stock Exchange
– Hanoi Stock Exchange
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– Unlisted Public Company Market
Number of listed companies: 1,600 (as at Oct 8)
Market capitalisation: about US$350 billion (as at Oct 8), mostly concentrated in traditional sectors such as financials and real estate
Average daily trading value: US$1.3 billion (September)
Number of stock-trading accounts: over 11 million (as at end-September), or about 11 per cent of Vietnam’s population; 99.4 per cent held by retail investors.
Index inclusion
Once the reclassification is finalised, analysts project that Vietnam’s weighting could range from 0.3 per cent to 0.7 per cent in the FTSE Emerging Index, which includes 23 countries.
In comparison, weightings of Malaysia, Thailand, Indonesia, and the Philippines were at 1.74 per cent, 1.56 per cent, 1.25 per cent, and 0.47 per cent, respectively, as at Sep 30.
Based on FTSE’s criteria, some stocks that are expected to be included in the indices are:
- Vingroup – Vietnam’s largest private conglomerate, with a diversified portfolio spanning real estate, retail, automotive, and healthcare sectors.
- Hoa Phat Group – Vietnam’s leading industrial conglomerate primarily engaged in steel manufacturing, agriculture, and real estate.
- Vinhomes – The property development arm of Vingroup, specialising in high-end real estate projects in major cities across Vietnam.
- Masan Group – Vietnam’s leading conglomerate with a strong presence in consumer goods, food and beverage, retail, and mining sectors.
- Vietcombank – Vietnam’s largest state-backed commercial bank by market capitalisation
- Vinamilk – Vietnam’s largest dairy producer
- SSI Securities – Vietnam’s leading securities brokerage and investment firm
Trading quirks
FTSE rival MSCI, whose indices are widely benchmarked by both active and passive investment strategies, still classifies the South-east Asian nation as a frontier market – a designation that is considered riskier and restricts many institutional investors and passive funds from purchasing shares in locally listed companies.
Key remaining hurdles:
- Certain companies in conditional and sensitive sectors are subject to foreign ownership limits of up to 75 per cent. Low foreign room also persists, impacting the participation of international buyers.
- Company- and stock market-related information may not always be readily available in English and, at times, lacks sufficient detail.
- Vietnam has implemented a short-term non-pre-funding solution, where brokers guarantee the settlement of trades. The system of a central clearing counterparty, however, is expected to only be operational in the first quarter of 2027 at the earliest.
- There is no offshore currency market, and the onshore currency market faces certain constraints.
To resolve these issues, the Vietnamese government approved a road map on Sep 12 with specific actions to upgrade the country’s stock market to emerging market status under FTSE Russell by 2025 and MSCI by 2030.
These efforts are slated to open its stock market wider through a series of reforms such as raising foreign ownership limits, upgrading clearing and settlement infrastructure, and ensuring equal treatment of foreign investors.
“Although the upgrade is an equities-specific development that will not materially impact the real economy, it nevertheless sends a powerful signal that Vietnam has achieved a key milestone in its financial and economic development,” Julius Baer equity research analyst Chua Jen-Ai said in a note on Wednesday (Oct 8). “This should serve as a catalyst for more market-friendly reforms.”
Capital flow dynamics
Although Vietnam currently makes up 32 per cent of the FTSE Frontier Index, the index itself has a total market capitalisation of only US$155.8 billion, which is 60 times smaller than that of FTSE Emerging Index at US$9.4 trillion.
“Even with a much-reduced weighting, an upgrade to a larger index would be positive in giving Vietnam access to a much larger pool of capital,” Chua added.
Ho Chi Minh Securities Corporation (HSC) estimates passive investments to be moderate at US$600 million-US$800 million when Vietnam is formally added to the FTSE Emerging Markets Index, along with stronger local participation as market uncertainty fades after the upgrade announcement.
Tyler Nguyen, HSC chief market strategist, also anticipates minor passive outflows from other emerging markets as a result of global funds realigning their portfolios following the reclassification of Vietnam.
“But they would not be major, as Vietnam’s weightings in emerging market indices are expected to be very small,” he said.
He added that as the major ETF tracking the FTSE Frontier Index has already liquidated all Vietnamese positions since March 2025, passive outflows of frontier-market funds from Vietnam should also remain negligible in the coming period.
Meanwhile, active fund inflows, projected to range from US$3.6 to 4.8 billion, are expected to play a more pivotal role, as they can be deployed ahead of the official inclusion, he said.
Quan Trong Thanh, head of equity research at Maybank Investment Bank Vietnam, believed the upgrade is a significant step in bringing Vietnam into the fold of funds’ investment choices, allowing them to actively deploy their capital in the new emerging market.
“But whether funds allocate to Vietnam will depend on the country’s ability to present a strong macro story such as solid growth and stable foreign exchange. If that happens, funds will likely increase their allocations to Vietnam over time,” he said.
Foreign investors registered roughly US$4 billion in net sales of Vietnamese stocks on local bourses in the first nine months of this year, marking about US$10 billion net foreign outflow in the past three years.
Despite such persistent outflow, Vietnam’s stock benchmark VN-Index has risen by over 34 per cent this year, driven by bullish sentiment of domestic investors over the market upgrade outlook, Vietnam’s pro-growth reforms and better-than-expected trade deal with the United States.
