Vietnam's Stock Market Set for $5-7 Billion Boost as FTSE Russell Recognizes Improvements
FTSE Russell has recognised Vietnam's advancements in trading infrastructure and market transparency, paving the way for potential reclassification and significant passive inflows.
Vietnam's stock market could attract $5-7 billion in passive investments if the upgrade is successful. The country has implemented the non-prefunding (NPF) model, easing concerns over foreign ownership limits (FOL) and currency risk. With 85% of major funds supporting its reclassification, Vietnam is close to being promoted from 'frontier' to 'secondary emerging' market status. HSBC notes that Vietnam has met seven out of nine criteria required for promotion to FTSE indices. If approved, Vietnam will join the FTSE Secondary Emerging Index in March next year. Leading investors such as BlackRock, Vanguard, and State Street back the upgrade due to increased liquidity and regulatory alignment. Vietnam's stock market has seen a 15% quarter-on-quarter increase in liquidity, further strengthening its case for accessibility.
Vietnam's upgrade could lead to inflows of up to $10.4 billion, with $3.4 billion expected from passive funds once inclusion is completed. The government, represented by Deputy Prime Minister Ho Duc Phoc, has approved a project aiming to fully meet FTSE Russell’s criteria for upgrading Vietnam's market status by 2025.
