Vietnam's stock market has been upgraded from Frontier Market to Secondary Emerging Market status by FTSE Russell, effective officially today, September 21, after years of reforming its criteria until it passed the reclassification. The move is expected to draw billions of dollars into the market. FTSE Russell, a leading global financial data provider and index compiler, said the reclassification will help attract investors and give Vietnamese companies greater access to capital, while supporting the government's goal of pushing economic growth to its 10% target. The Vietnamese government itself is also easing investment restrictions, leaving market players watching to see whether MSCI will follow suit and reclassify Vietnam's stock market. Vietnam's stock market had been placed on FTSE's Watchlist awaiting a possible upgrade since 2018. Last Friday, September 18, Vanguard, an asset management company, said it plans to invest about 2.5 billion dollars in Vietnam next year through funds tracking FTSE indexes. Duncan Burns, head of investment management and global equities for Asia-Pacific at Vanguard Australia, said at a conference organised by SSI, a Vietnamese securities firm, that Vanguard plans to hold assets in Vietnam for many decades to come, as long as Vietnam's stock market remains in the FTSE indexes. He said the removal of the requirement for investors to pre-fund purchases, known as non-prefunding, along with the adoption of a global broker model and the rollout of the KRX system, a new trading platform developed jointly with the South Korean stock exchange, were all factors that allowed Vietnam to meet the final criteria. FTSE also disclosed a list of 27 Vietnamese listed companies eligible for inclusion in the FTSE Global Equity Index Series and related indexes, mostly banks and securities firms. Among them are the property developers Vingroup and Novaland. FTSE will phase in Vietnam's reclassification gradually, starting to increase the weighting of the stocks this month, followed by March, June, and a final phase in September 2027.
