Vietnam's Stock Market Set for Boost with FTSE Upgrade

Foreign interest in Vietnamese stocks is rising as the country is reclassified to secondary emerging market status by FTSE Russell. This transition, to be phased through 2027, is expected to bring substantial inflows, boosting Vietnam's market profile despite existing challenges like foreign ownership limits.

Foreign interest in Vietnamese stocks has surged ahead of the country's anticipated upgrade to secondary emerging market status by FTSE Russell. This shift, set for Monday, is poised to channel up to $6 billion into Vietnamese equities as indexes adjust their portfolios.

The reclassification will unfold over four stages through 2027. Brokerage SSI Research predicts passive funds tracking FTSE indexes will purchase approximately $240 million worth of Vietnamese shares during the first tranche on September 18, before the index changes take effect. This prospect has rekindled foreign interest, with overseas investors buying net shares worth 1.42 trillion dong ($54.63 million) this week despite being net sellers by over $3.6 billion this year.

In August, FTSE identified 27 eligible Vietnamese stocks for its FTSE Global All Cap Index, including major players like Vingroup, FPT, and Hoa Phat Group. SSI Research suggests the largest first-round ETF inflows will target VPBank, Vinhomes, FPT, and Hoa Phat, while Vingroup might face net outflows of $28 million. Craig Martin of Dynam Capital views the upgrade as a marker for increased foreign investment interest, although challenges like foreign ownership limits persist.