Vietnam's Landmark Upgrade to Emerging Market Status by FTSE Russell
FTSE Russell announces Vietnam's upgrade from frontier to secondary emerging market status, effective September 21, 2026. This follows significant market reforms including the elimination of foreign ownership caps and improved trading systems. The upgrade is expected to attract substantial foreign investment, with estimates ranging from $3.4 billion to $6 billion. Vietnam's stock market has already shown strong performance, with the VN Index up 33% this year. The government aims to meet FTSE Russell's full criteria this year and achieve MSCI emerging market status by 2030.
*this image is generated using AI for illustrative purposes only.
Vietnam has achieved a significant milestone in its financial market development, as FTSE Russell announces its upgrade from frontier to emerging market status. This pivotal change is set to take effect on September 21, 2026, marking a new era for Vietnam's economy and its attractiveness to global investors.
Key Highlights of the Upgrade
- Effective Date: September 21, 2026
- New Classification: Secondary emerging market
- Peer Group: Joining China, India, and Indonesia
Market Reforms and Enhancements
Vietnam's journey to this upgrade began in September 2018 when it was added to FTSE Russell's watchlist. Since then, the country has implemented several crucial reforms to meet the requirements for emerging market status:
- Elimination of foreign ownership caps below legal limits
- Removal of pre-funding requirements for overseas investors in equity trades
- Launch of the KRX trading system in May to strengthen market infrastructure
Potential Impact on Foreign Investment
The upgrade is expected to attract significant foreign capital inflows:
| Source | Estimated Inflows |
|---|---|
| FTSE Russell | $6.00 billion |
| HSBC | $3.40 billion |
Current Market Performance
Vietnam's stock market has shown robust performance in anticipation of this upgrade:
- VN Index: Up 33% this year, reaching new highs
- Current Valuation: Trading at 12.20 times forward earnings
- Historical Comparison: Three-year average of 10.10 times forward earnings
Future Outlook
The Vietnamese government has set ambitious goals for further market development:
- Aim to meet FTSE Russell's full criteria this year
- Target to achieve MSCI emerging market status by 2030
This upgrade represents a significant vote of confidence in Vietnam's economic reforms and market infrastructure improvements. It positions Vietnam alongside other major Asian economies in the eyes of global investors, potentially leading to increased foreign investment and greater market liquidity.
As Vietnam transitions to its new status, investors and market watchers will be keen to observe how this change impacts the country's economic landscape and its role in the global financial markets.
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