Vietnam enters FTSE Russell emerging market index, eyes $6 billion inflow

Vietnamese equities have been admitted to FTSE Russell's emerging market indexes, a long-awaited upgrade that could channel as much as $6 billion into the country's stock market. The index provider had kept Vietnam on its watchlist since 2018 before confirming the reclassification.

The shift will be implemented in four stages through 2027: 10% in September, a further 20% in March, and 35% each in June and September of next year.

Anticipation of the move had already stirred foreign interest. Overseas investors bought a net 2.7 trillion dong ($104 million) worth of shares last week, according to Ho Chi Minh Stock Exchange data, though they remain net sellers by roughly 91 trillion dong overall.

Thomas Nguyen, chief global markets officer at SSI Securities Corporation, cautioned that the initial enthusiasm may cool. "I expect the market to remain relatively subdued until we approach 2027," he said, adding that attention should return closer to the March tranche, when the larger allocation could have a more visible impact on local investors.

Asset management firm Vanguard plans to raise its Vietnam investment to about $2.5 billion over the next few years.

Challenges persist, including foreign ownership limits and free-float constraints at some companies. The upgrade has also renewed hopes for a future MSCI reclassification. Investors point to the introduction of a central counterparty clearing mechanism, expected in 2027, as a step toward meeting MSCI's market-access criteria.

Nguyen described the clearing rollout as pivotal. "FTSE is about access into the market. MSCI is about scale," he said. "That's why central counterparty clearing is such an important thing."