Vietnam makes 'huge difference' in terms of accessibility criteria: FTSE Russell exec

Vietnam has made “significant progress in meeting the requirements” over the past two years for an upgrade from frontier market to secondary emerging market status, said Wanming Du, FTSE Russell's Asia-Pacific director of index policy.

Speaking on the recent Index Ideas podcast about Vietnam’s market reclassification, Du said the country had met the final two criteria for secondary emerging market status by introducing the non-pre-funding (NPF) model and implementing a failed-trade management mechanism.

“Additionally, the account opening process - as a foreign investor, you need to open an account - that process has been simplified. So that makes a huge difference in terms of the accessibility criteria,” she was quoted as saying in a transcript released by FTSE Russell on Wednesday.

FTSE Russell on April 7, 2026 confirmed the reclassification of Vietnam from frontier to secondary emerging market status, effective from Monday, September 21, 2026, as the country "meets all criteria" for the status.

The announcement followed the organization's March 2026 semi-annual country classification review for equities for countries monitored by its global equity indices.

According to Du, Vietnam’s economic growth rate this millennium has been nothing short of spectacular: the country has witnessed average GDP growth of over 6.3% a year between 2000-2024, according to the World Bank. But such a performance alone is not enough for index inclusion. “A robust market infrastructure is fundamental to investors’ confidence,” she said.

“Ultimately, I think it is to a market's true investability as well. An efficient trading and settlement mechanism, a resilient trading system, a transparent regulatory framework, even just a simple, straightforward account opening process all play a very important role in that.

“They directly influence how investors manage operational and counterparty risk. They determine how easily investors can enter and exit a market. I would say that even when a market has a strong economic fundamentals, without a reliable market infrastructure it cannot be considered genuinely accessible or investable,” Du noted.

FTSE Russell has extensive interactions with both governmental and private sector bodies throughout the process. The company worked very closely with the regulator, the State Securities Commission, the stock exchanges and the Depository and Clearing House (VSDC).

It also engaged with organizations such as the World Bank and ASIFMA. On top of that, FTSE Russell regularly checks in with both the onshore and offshore market participants, such as the buy side, the custodians, and then the banks.

FTSE Russell in mid April narrowed its list of Vietnamese stocks meeting screening criteria for the FTSE Global All Cap Index from 32 on April 7 to 23 names.

Several familiar stocks such as SAB (Sabeco), DIG (DIC Corp), FRT (FPT Retail), and EIB (Eximbank) have been excluded.

Compared with the list released on April 7, nine stocks no longer meet FTSE Russell’s criteria in this round, including SAB (Sabeco), DPM (Petrovietnam Fertilizer and Chemicals Corporation or PVFCCo), HUT (Tasco JSC), DIG (DIC Corp), EIB (Eximbank), DXG (Dat Xanh Group), PDR (Phat Dat Corporation), FRT (FPT Retail), and KDC (Kido Group).

In a newly-released report, local broker SSI Securities estimates that inflows from ETFs tracking FTSE indices could bring approximately $1.3 billion into the Vietnamese market. Among them, funds such as Vanguard Total International Stock ETF and Vanguard FTSE Emerging Markets ETF are expected to contribute significantly, with inflows of about $495 million and $481 million, respectively.

In a related development, SSI Research believes Vietnam has a high likelihood of being added to MSCI’s watchlist in the June 2026 review. Currently, the market meets around 10 out of 18 accessibility criteria under MSCI’s framework and continues to improve on the remaining metrics, the research unit said.

Notable progress includes the effective implementation of the non-prefunding mechanism, a well-progressing roadmap for adopting a central counterparty (CCP) clearing mechanism, and the expansion of short-position tools via VN30 index futures.

On the transparency front, disclosure in English by regulators and listed companies has improved compared to the past. Regarding foreign ownership limits, the actual foreign ownership ratio on the Ho Chi Minh Stock Exchange (HoSE) increased from 41.4% to 46% in April 2026, mainly driven by newly listed large-cap companies offering 100% foreign ownership room.

“As a result, 17 out of 18 MSCI criteria are now close to meeting the basic requirements. The remaining criterion relates to foreign exchange (FX) market liberalization, which has not yet been fully satisfied. This is a complex requirement, and many emerging markets within the MSCI index have also not fully met it,” SSI Research noted.

Regarding FX, recent discussions on allowing commercial banks to provide foreign exchange hedging instruments are being considered as part of ongoing efforts to complete the market framework.

What does a change from frontier to secondary emerging market status signify in practice?

It means that from September, Vietnamese stocks will be eligible for the FTSE Global Equity Index series (FTSE GEIS), which includes major benchmarks such as the FTSE All-World, the FTSE Global All Cap and the FTSE Emerging Market indices.

For example, the FTSE All-World index, which currently includes over 4,250 large- and mid-cap stocks from 48 developed and emerging markets, will be adding its 49th member country. And the FTSE Emerging index, which currently includes over 2,250 large- and mid-cap stocks from 23 emerging markets, will be adding a 24th member country.

Vietnamese stocks’ inclusion in these and other FTSE GEIS indices will occur in four tranches, beginning in September 2026 and concluding in September 2027. This phased approach is designed to help ensure an orderly market transition by managing the anticipated capital inflows. In turn, this will support adequate funding and liquidity throughout the inclusion process.