An investor watches stock changes at the headquarters of the Bao Viet Securities Company. Photo: VNA  

FTSE Russell has officially announced that Vietnam will be reclassified from frontier to secondary emerging market status, marking a major milestone for the country’s capital market after more than a decade of reforms.

The announcement was made early on October 8 (Hanoi time), following the close of US markets on October 7, as part of the index provider’s September 2025 Country Classification Review.

The upgrade is expected to take effect on September 21, 2026, subject to an interim assessment in March 2026 to confirm Vietnam’s progress in improving market access through global brokers.

According to FTSE Russell, Vietnam has addressed key technical barriers that previously prevented the upgrade, including settlement cycles and the handling of failed trades. In late 2024, the country introduced a non-pre-funding trading model, allowing foreign institutional investors to purchase shares without fully pre-depositing funds.

A mechanism to resolve settlement failures was also established, bringing Vietnam’s trading practices closer to international standards.

The index provider noted significant improvements made by Vietnamese regulators, confirming that the country now meets all secondary emerging market criteria.

However, it also highlighted limited access to global brokers as an area that still needs attention. While not a formal requirement for reclassification, FTSE Russell said enhanced access is crucial for foreign investors to replicate indices effectively.

The upgrade will be implemented in stages, with FTSE Russell continuing to monitor Vietnam’s market reforms and gather feedback from international investors before the March 2026 review to ensure the transition remains on schedule.

"The official recognition and upgrade of Vietnam's securities market is clear evidence of the country's sound development path and its growing capacity to integrate deeply into the global financial system," Vietnam's Finance Minister Nguyen Van Thang said in a statement.

Vietnam's benchmark stock index has surged 33% this year, making it the best-performing stock market in Southeast Asia.

The reclassification is expected to attract billions of dollars in foreign capital from both active and passive funds. International brokerages estimate that net foreign inflows could range between 6 billion USD and 10 billion USD in a positive scenario.

Historically, markets often see stronger liquidity in the months leading up to an upgrade, followed by a period of adjustment after the announcement.

The State Securities Commission (SSC) said the upgrade is a key milestone that recognises Vietnam’s comprehensive reforms to build a transparent, modern and efficient market aligned with global standards.

“This achievement reflects the Government’s strong leadership, close coordination among agencies, and valuable support from the World Bank, FTSE Russell experts and global investors,” the SSC said in a press release./.