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Vietnam is expected to see foreign investment inflows of up to USD 6 billion after securing an upgrade to emerging market status by FTSE Russell. The move is likely to improve liquidity and restore investor confidence following sustained foreign outflows in recent years. The inclusion will be carried out in phases starting September, with both passive and active investments anticipated. Ongoing market reforms, including easing access for foreign investors and improvements in clearing systems, have supported the upgrade. The government is now targeting a further upgrade by MSCI, potentially ahead of its initial 2030 timeline.
Vietnam's stock market regulator has indicated that the country's upgrade to emerging market status by FTSE Russell is expected to bring back foreign investment into its equity markets, which have seen consistent outflows over the past year. The regulator stated that the development is expected to attract large-scale global capital, improve liquidity, and strengthen Vietnam's position within the international financial system. Advertisement
The upgrade, confirmed in the past week, will come into effect in September, when Vietnam will begin to be included in FTSE Russell's global equity indices. The inclusion will take place in multiple phases to ensure smooth market absorption. Vietnam has been on the watchlist for this transition since 2018, alongside other major emerging markets such as China and India.
FTSE Russell estimates that the move could bring in up to USD 6 billion in foreign capital. Analysts at Maybank Securities indicated that foreign investments are likely to increase gradually ahead of and during the inclusion process, with passive inflows combined with larger active allocations potentially reaching as much as USD 8 billion. They noted that the phased implementation is expected to support stable improvements in liquidity and market depth.
The development comes at a time when Vietnam's equity market has been witnessing sustained foreign selling. Data shows that foreign investors have pulled out nearly USD 1.2 billion from the Ho Chi Minh Stock Exchange so far this year, following net outflows of about USD 5 billion recorded in 2025. The upgrade is therefore seen as a key step in reversing this trend.
According to FTSE Russell's estimates, Vietnam could achieve a weighting of around 0.35% in its emerging market index after the inclusion. Companies such as Vingroup, Masan Group, FPT Corp and Hoa Phat are expected to be among those considered for index inclusion.
The index provider expects around USD 1.5 billion in passive inflows, with a staggered allocation plan. About 10% of the inflows are expected in September, followed by 20% in March, and 35% each in June and September next year.
Market experts have pointed out that although Vietnam remained on the watchlist for several years, significant reform efforts only began in 2022. This shift followed volatility in the bond and real estate sectors, which highlighted limitations in the country's credit-driven growth model. Since then, authorities have introduced measures such as removing equity pre-funding requirements, planning a transition to centralized clearing by 2027, and enabling foreign investors to access the market directly through global brokerage platforms.
Looking ahead, Vietnam is aiming for a further upgrade by MSCI, with an initial target set for 2030. However, analysts suggest that this timeline could be advanced if current reforms continue at pace. It is understood that achieving MSCI status would unlock significantly larger capital inflows, although foreign ownership limits remain a key challenge that needs to be addressed.
Source Reuters
5th Jun, 2025
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