(EN) GTJASVN Research_Flashnote_Assessment of FTSE’s Announcement on Vietnam’s Market Upgrade_Oct 08 2025

FTSE Russell announced its intention to upgrade Vietnam’s stock market from Frontier Market (FM) to Secondary Emerging Market (Secondary EM) status on October 7, 2025 (U.S. time). The reclassification is expected to take effect in September 2026, pending a review in March 2026. The decision recognizes Vietnam’s substantial progress in market reform and infrastructure improvement. FTSE acknowledged that Vietnam now meets the key criteria for Secondary Emerging Market status, reflecting growing market maturity and regulatory transparency. However, the organization also noted lingering challenges, particularly regarding international broker access—an important principle for sustaining the upgrade momentum. The announcement reinforces global confidence in Vietnam’s long-term investment outlook. Historical precedent suggests that once FTSE announces an upgrade intention, the implementation typically proceeds as planned. While active investors may position ahead of the official reclassification, passive inflows are expected to materialize after the upgrade becomes effective. Estimated passive inflows could reach USD 0.8–1.2 billion within the first 1–3 years post-upgrade, while active inflows will depend on individual fund strategies. Despite the positive sentiment, foreign investors have net sold over USD 3 billion in 9M2025, underscoring that the upgrade is only the first step toward attracting sustainable foreign capital. Continued policy reforms, market infrastructure enhancement, and product diversification will be essential to strengthen Vietnam’s position as a credible emerging market destination.