A Rival to Indonesia: Vietnam Stock Exchange Upgraded to Emerging Market
The Vietnam stock exchange has officially been included in the FTSE Russell emerging market index on Monday (21/09/2026), marking a significant milestone for the country’s stock market after years of undergoing reforms to attract foreign investors.
Quoting Reuters, the index provider estimates that this move has the potential to divert up to US6billion(approximatelyRp106.8trillionatanexchangerateofRp17, 800/US) into Vietnam. The country has been on the watchlist for this upgrade since 2018.
The expectation of this status upgrade has also revived foreign investor interest in Vietnamese equities. According to data from the Ho Chi Minh Stock Exchange, foreign investors recorded net purchases of 2.7 trillion dong, or approximately US$104 million, last week. However, on an accumulated basis, foreign investors still maintain a net sell position of around 91 trillion dong.
Thomas Nguyen, Chief Global Markets Officer at SSI Securities Corporation, the second-largest broker in Vietnam, predicts that market enthusiasm may subside following the initial euphoria. He suggests that market conditions are likely to remain relatively subdued until approaching 2027.
The transition process for Vietnam’s inclusion in the index will be carried out in four stages through 2027, starting with 10% this September, followed by an additional 20% in March, and then 35% each in June and September of the following year.
Nguyen added that market attention is expected to increase again ahead of the next inclusion stage in March, as the larger allocation portion could have a more significant impact on domestic investors.
Following this upgrade, asset management firm Vanguard plans to increase its investment in Vietnam to approximately US$2.5 billion over the next few years.
Nevertheless, several challenges remain, including foreign ownership limits and the limited free float of shares in several listed companies.
This achievement has also revived market expectations regarding Vietnam’s potential upgrade in the MSCI index. Investors believe that the planned implementation of the central counterparty clearing (CCP) mechanism, targeted for 2027, could be the key for Vietnam to meet MSCI market access requirements.
Nguyen emphasised that the implementation of the CCP mechanism will be a crucial factor in Vietnam’s efforts to achieve an MSCI upgrade in the future. He explained that while FTSE is more market-access oriented, MSCI focuses more on scale, making the existence of a centralised clearing system vital.