On April 9, 2025, after the US market closes, FTSE Russell will announce its review of Vietnam's stock market with the potential to upgrade the country from frontier to secondary emergent market status. This decision is anticipated to be monumental for Vietnam's financial future, as it marks the culmination of years of anticipation.
Currently, Vietnam is recognized as one of only two markets under FTSE Russell's scrutiny for potential upgrades. The assessments are part of FTSE Russell's extensive evaluation of market classifications globally, which could significantly open the floodgates for new investment capital.
The classification review is following a structured timeline initiated by the FTSE Country Classification Advisory Committee meeting on March 4, 2025. Regional equity advisory committees will review the facts during the week starting March 10, 2025, with significant discussions slated for the FTSE Russell Policy Advisory Council on March 20, 2025. The final board meeting of the FTSE Russell Index Governance Board is scheduled for April 2, 2025—just six days before Vietnam's possible upgrade announcement.
Analysts predict the upgrade could attract billions of USD of foreign investments, particularly from institutional investors now limited by regulations forbidding investment in frontier markets. Morgan Stanley, during discussions with the State Securities Commission last year, expressed optimism about the ramifications of such advancements. "Vietnam’s stock market could attract 800 million USD from passive investors using the FTSE index and 2 billion USD from passive investors using other indices," stated one representative from Morgan Stanley. This potential influx of capital is staggering, considering the restrictions currently faced by many funds, which would be lifted should Vietnam achieve its sought-after market status.
Beyond passive investments, the upgrade might entice active funds to engage with Vietnam's market more vigorously as well. Morgan Stanley anticipates approximately 4 to 6 billion USD inflow targeting active investments upon Vietnam's elevation to secondary market status.
The sentiment surrounding Vietnam's prospects has gained momentum, with financial firm VNDIRECT forecasting favorable reviews during the March evaluation process, projecting Vietnam’s consummate transition set for FTSE Russell's September 2025 review. VNDIRECT noted: "FTSE Russell will deliver positive evaluations for Vietnam's stock market," underscoring the anticipation and expectations among financial institutions.
Vietnam's potential market upgrade is key, not only due to the promise of increased foreign capital but also the broader economic effects it may yield. A successful transition could pave the way for enhanced liquidity within the market, improve investor confidence, and attract more global funds willing to engage with the Vietnamese economy.
The discussions surrounding the upgrade highlight the changing dynamics of Vietnam's economic framework, reflecting its growth story and the strategic shifts made over recent years. With each pending evaluation, market experts remain hopeful, awaiting the February to April meetings for conclusive insights.
Reliable sources suggest the market has already demonstrated the necessary conditions set out by FTSE Russell for advancements, indicating readiness for such elevation. If the conditions are met, the repercussions on the Vietnamese stock market and economy could be transformative, marking its evolution on the global investment stage.
For many institutional investors, upgrading Vietnam's market classification would eliminate barriers now restricting them from capitalizing on the opportunities presented within the region. This shift could eventually lead to Vietnam being viewed not just as a burgeoning economy but as a competent investment destination.
Investors and traders alike are waiting with bated breath as April approaches, with hopes pinned on FTSE Russell’s decisions. This could represent not just another market classification change; it may well symbolize Vietnam's ascent to recognition as a credible player on the global financial arena.