On 7 October 2025, FTSE Russell announced that Vietnam would be reclassified from Frontier to Secondary Emerging Market status, with an effective date of 21 September 2026, subject to an interim review in March 2026. The decision ended a seven-year wait since Vietnam was first placed on FTSE’s watchlist in 2018 and positioned the country alongside China, India, Indonesia and Saudi Arabia in the secondary emerging tier.

The stakes are substantial. FTSE Russell’s indices have approximately USD 18.1 trillion in assets benchmarked against them globally. Vietnam is projected to account for 0.22% of the FTSE Emerging Index and 0.34% of the FTSE Emerging All Cap Index – figures that appear modest until applied to the scale of funds mandated to replicate those benchmarks.

David Sol, Global Head of Policy at FTSE Russell, signalled both endorsement and continued scrutiny: “FTSE Russell congratulates the Vietnamese market authorities on the significant progress made in aligning with international standards. The reclassification of Vietnam reflects the implementation of key market infrastructure enhancements, and we look forward to continued collaboration to ensure sustained progress ahead of the target reclassification date in September 2026.”

The Capital Estimates

The inflow projections vary in methodology but converge on a materially positive outcome. VinaCapital estimates total foreign flows of US$ 5-6 billion: approximately US$ 1 billion in passive allocations from funds tracking the FTSE EM All Cap Index, and US$ 4-5 billion in active capital from fund managers repricing Vietnam’s risk premium. The World Bank projects short-term inflows of approximately US$ 5 billion, rising to as much as US$ 25 billion by 2030, should MSCI follow with its own reclassification.

HSBC Global Investment Research takes a wider range: US$ 3.4 billion from active funds in its base case, rising to US$ 10.4 billion in its most optimistic scenario including passive flows. Notably, HSBC data shows that 38% of Asia-focused funds and 30% of global Emerging Markets (EM) funds already hold Vietnamese equities, a pre-existing foothold that reduces the friction for active reallocation once the upgrade is formalised.

Gary Harron, Head of Securities Services at HSBC Vietnam, articulated what this signifies beyond the headline figures: “For Vietnam, shedding the frontier label can profoundly reshape investors’ behaviour and confidence, altering the trajectory of its continued long-term economic development and reducing dependence on any single trading partner.”

The VN-Index closed 2025 approximately 41% higher than its January open, making Vietnam one of the best-performing equity markets in Southeast Asia for the year. Much of this appreciation reflects anticipatory positioning rather than post-upgrade flows. HSBC analysts have cautioned that near-term upside may be constrained by this front-loading; profit-taking following formal reclassification, a pattern observed in peer markets, remains a live risk for active managers entering late.

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The VN-Index closed 2025 approximately 41% higher than its January open, making Vietnam one of the best-performing equity markets in Southeast Asia for the year.

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The Infrastructure Constraint

The most operationally significant issue is one that institutional investors will encounter at the point of execution. Vietnam’s State Securities Commission has committed to launching a central counterparty clearing (CCP) system by Q1 2027 – the mechanism required for global custodians and prime brokers to participate at institutional scale. The CCP will be established as a subsidiary of the Vietnam Securities Depository and Clearing Corporation (VSDC), with the legal and institutional framework to be completed by end-2026 and the system itself live in Q1 2027.

The tension this creates is direct. Passive funds benchmarked to the FTSE Emerging Index must begin purchasing Vietnamese equities when the reclassification takes effect in September 2026. Without the CCP operational, those orders must route through Vietnam’s non-prefunding (NPF) model; an interim mechanism that removes the old pre-trade cash requirement but does not provide the counterparty protection that global prime brokers require for large-scale, time-sensitive execution.

FTSE Russell has flagged global broker access as the central focus of its March 2026 interim review, specifically assessing whether sufficient progress has been made to enable effective index replication. The outcome of that review determines whether the September upgrade proceeds on schedule.

The Infrastructure Gap

Vietnam FTSE Emerging Market Reclassification · September 2026

Index Live

21 Sep 2026

FTSE inclusion effective

CCP Operational

Q1 2027

Clearing backbone live

Execution Gap

Approx. 6 Months

CCP offline at point of index inclusion

Day-One Constraint

Passive funds mandated to rebalance on day one must route orders through Vietnam’s legacy NPF infrastructure — absorbing wider spreads and slower settlement while prime broker and global custodian access remains constrained.

⚠ Structural Implication

The CCP, once live, will materially reduce counterparty risk and improve liquidity depth. Until then, execution slippage is structural – not transient.

The first tranche of inflows belongs to whoever can navigate the plumbing.

FTSE Russell / LSEG • VinaCapital

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The 28 Stocks and Their Constraints

FTSE Russell’s preliminary list of 28 eligible Vietnamese stocks includes prominent large-caps – Hoa Phat Group, Vietcombank, Vingroup and Vinhomes – alongside mid-caps such as Masan Group, Sabeco and Vinamilk. The list is based on data as at 31 December 2024 and remains subject to revision before the formal September 2026 review.

A structural limitation for EM-mandate fund managers is sector concentration. Vietnam’s listed market is heavily weighted in Financials (37%) and Real Estate (19%), restricting diversification for funds with sector exposure caps. The absence of significant technology, healthcare and industrial representation in the eligible universe narrows the investable pool for global allocators with specific mandate restrictions.

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Vietnam’s listed market is heavily weighted in Financials (37%) and Real Estate (19%), restricting diversification for funds with sector exposure caps.

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Anthony Le, Deputy Director of Institutional Client Brokerage at Vietcap Securities, nonetheless characterised the step as transformative: “This historic milestone not only demonstrates the determination of the State Securities Commission in meeting the FTSE Russell index criteria, but also opens a new era of growth potential for the Vietnamese market, creating conditions for access to a new group of investors who were previously restricted from investing in Vietnam.”

The MSCI Horizon

Vietnam’s FTSE upgrade is explicitly framed as a first step, not a destination. The government has outlined a roadmap to meet MSCI Emerging Market criteria by 2030, a reclassification that would be substantially larger in impact given MSCI’s wider global benchmarking footprint.

Vietnam’s Finance Minister Nguyen Van Thang positioned the FTSE decision in those terms: “The official recognition and upgrade of Vietnam’s securities market is clear evidence of the country’s sound development path and its growing capacity to integrate deeply into the global financial system. The Ministry of Finance remains committed to advancing deeper and broader reforms, maximising accessibility for both domestic and international investors, while accelerating the modernisation and digitalisation of its market infrastructure.”

With the KRX trading platform operational since May 2025 – capable of processing up to US$ 5 billion in daily volume against current turnover of approximately US$ 1.5 billion – and the CCP on a defined delivery timeline, the structural prerequisites for MSCI consideration are being assembled in sequence. If both upgrades materialise, the World Bank’s US$ 25 billion projection by 2030 becomes the operative planning scenario for capital markets participants.

The September 2026 reclassification is a verified event. The capital follows. But the question of who captures it – and at what execution cost – will be settled by plumbing that does not yet exist.

References:

• FTSE Russell upgrades Vietnam to emerging market status, pending interim review
• FTSE Russell / LSEG — Vietnam Reclassification FAQ, November 2025
• LSEG — Vietnam: The ASEAN Powerhouse
• VinaCapital — Vietnam Emerging Market Upgrade Research Note, October 2025
• Vietnam Briefing — Vietnam Reclassified to Emerging Market Status by FTSE Russell
• VietnamPlus — International Media: Foreign Capital Set to Strongly Flow into Vietnam
• VietnamPlus — Vietnam’s Stock Market Upgrade Signals Tide of Capital
• Viet Nam’s stock market upgraded to secondary emerging market
• The Investor (Vietnam) — Vietnam’s Stock Market Status Upgraded to Secondary Emerging, Effective Sept 21, 2026
• Vietnam News — FTSE Russell Plans Inclusion of 28 Vietnamese Stocks in 2026 Upgrade
• VietnamPlus — Vietnam’s Stock Market Closes 2025 with Impressive 41% Gain
• Vietnam Investment Review — FTSE Russell Clarifies Vietnam’s Reclassification Roadmap

View More

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The story of Vietnam’s economy has been one of resilience and steady growth despite the pandemic that has stymied activities across the world. The country’s growth rate was the highest in Asia in 2020, according to IMF figures, owing to their ability to swiftly pivot and effectively capture opportunities that lay open in the US and China trade tussle. Additionally, Vietnam’s quick response to the COVID-19 pandemic in the early stages showcased best practices in disease tracking and management.

None of this would have been possible if its economic structure was not based on strong fundamentals and policies developed over the past three decades.

The result is that rapid technological and socioeconomic development, increasing foreign direct investment, and an emerging start-up ecosystem have all helped to ease the impact of COVID-19 on the private sector. The Asian Development Bank (ADB) forecasts strong economic growth in Vietnam into next year with 6.7% growth expected this year and 7% expected in 2022.

Christopher Jeffery, British University Vietnam (BUV) chief academic officer and Vietnam Business Forum vice chairman. Photo: LinkedIn

It is not difficult to understand how this successful outcome is possible, even in the midst of a pandemic, after talking to Christopher Jeffery, chief academic officer at the British University Vietnam (BUV) and vice chairman of the Vietnam Business Forum.

Having lived and worked in Vietnam over the last decade, he has witnessed not only the pace of development in the country, but also the enthusiasm of the population to learn key skills to help them acquire better jobs in a globalised workforce.

In his view, activities such as the initial journey from the airport into Hanoi and going shopping, illustrate how much things like infrastructure and supply chains have changed in a relatively short period.

“I’ve really seen a massive change,” Jeffery said.

He notes that modern airports with the latest tech systems are now the norm and that even the landscape throughout the journey into Hanoi tells the story of the country’s rapid modernisation.

“It shows the journey of Vietnam in 10 years, and it’s one that has, from a political – but also business level – really taken on board technology, the 4IR (Fourth Industrial Revolution), and decided that is the future.”

Jeffery noted how the manufacturing and industrial sectors have shifted from, “basic outsourcing to value package outsourcing” by moving up the value chain from its well-established specialties within the IT sector as well as in non-IT skills, such as furniture manufacturing and design. This has enabled Vietnam to be open to opportunities to contribute at every part of the value chain supplying budget retailers as well as more expensive brands.

This coincides with various major global trends coming together, such as the push to diversify manufacturing operations to improve supply chain resilience and rapid technological advancement, to create this opportunity for Association of Southeast Asian Nation (ASEAN) members. As Boston Consulting Group (BCG) points out, Vietnam was selected as the destination for a new Samsung manufacturing hub due to, “the quality of its young and educated workforce, widespread internet access, a domestic venture capital ecosystem, and government incentives and support”. The country has also prioritised advanced manufacturing systems and continues to receive significant foreign-direct investment (FDI).

“That illustrates what Vietnam is good at,” said Jeffery. “When it’s good at something. It’s everything.”

The Mindsets Behind Economic Development

Beyond the political and business level, another powerful driver of the country’s economic performance has been the Vietnamese people themselves. As Jeffery explains, self-motivation and a commitment to learning (especially practical skills that open the door to international career opportunities) have been crucial to the country’s rapid growth.

This can be seen from the construction workers who make small talk in English to practice their skills, to parents who line up outside language centres with their children on weekends and students who develop impressive portfolios of accomplishments at a young age to earn spots in higher education institutions. In his view, this makes the generation that are finishing school ideally suited to the Fourth Industrial Revolution (IR4).

“Vietnamese (people) understand the power of language… if you look at the investment that’s coming in and where it’s coming from, they speak English because it’s the global language but then they will speak another language or another two languages. That gives them that powerful differentiator; they can communicate across every nationality virtually, and that is an amazing thing.”

Building a Business in Vietnam

As foreign investment increases and more businesses expand into the market, a motivated and skilled workforce is incredibly valuable. However, for business leaders, finding this type of workforce doesn’t necessarily guarantee success in the Vietnam market.

“Motivation is key, but the other one is commitment,” said Jeffery.

To him, that means differentiating between achieving success fast and maintaining a sustainable operation for the long term. Building a network is also essential, because it creates a solid foundation and opportunities for growth.

“That’s a great necessity here, because it is a laborious process sometimes, but once you’ve achieved it, it is fantastic,” he said.

Business leaders looking to expand into the Vietnam market or set up operations there face many opportunities for growth. However, success will be dependent on how committed you are to the market.

Christopher Jeffery’s tips for expanding into the Vietnam market:

• Don’t imagine it’s easy. It’s tough and it takes time.
• Trust is key. Building trust, and showing your commitment to Vietnam, is important.
• Find a friend. Whether it’s a commercial friend, or a chamber friend, for example, who knows Vietnam, knows the market, and knows the people.
• Leave your operating system at home. Vietnam operates as Vietnam and trying to impose your mindset of how to do things never works.

QUICK INSIGHTS

➤   Healthcare: Parallel to Vietnam’s economic dynamism is its healthcare system. The World Bank states that between 1990 and 2016, life expectancy rose from 70.5 to 76.3 years – “the highest in the region for countries at a similar income level.” However, the World Health Organisation notes Vietnam as among the countries with the fastest aging population in the world, owing to sharply declining fertility rates.

➤   Media Access &  Freedom: Despite these upward trends, Internet freedom remains low for the approximately 98 million people living in the one-party communist state. Vietnam scored 22/100 (not free) in Freedom House’s Freedom on the Net 2020 report, as government-imposed restrictions on alternative voices continue to raise concerns internationally.

➤   Connectivity: Evidence of Vietnam’s systematic planning to enable economic growth can also be found in the surge of Internet usage over the past decade. Statista figures reveal that nearly 70 million people are now connected – predominantly via mobile device – for activities including studies, ecommerce and entertainment.

➤   Ease Of Business: Vietnam’s sound foundations have also resulted in a strong focus on improving the business environment for foreign companies. The World Bank’s 2020 Doing Business report placed Vietnam 70th amongst 190 economies that were measured on various indicators of ease of doing business.  Of these, the country scored highest in access to credit and payment of taxes, pointing towards improved access to credit information, and upgraded technological infrastructure for tax payments.

The post Investing in Vietnam — Asia’s Bright Spot appeared first on Bizruption Asia.

What all of these multinational organisations had in common during his tenures was, what hamstrings executive teams everywhere, disruption. Not just the general challenge of keeping up with new industry trends, but sweeping shifts in how consumers and businesses operate. The thread that connected Wittig’s success with these organisations was empathy, a leadership quality that has witnessed a resurgence in business circles. COVID-19 has only fuelled belief in the power of empathic leadership as companies find the best ways to engage with employees and customers amid unprecedented circumstances.

“Only by living the customer’s experience, can you truly understand the value of your product.”

At IWG, his instinct to connect and empathise with customers has led him to reach out and find innovative, mutually beneficial solutions. Wittig says the crucial thing is to hold on to existing customers and stop the bleeding. “Then I can start selling,” he explains. “Occupancy is steadied and goes back up eventually. You need to show value to customers, then the revenues will improve, and eventually, I’ll get back to my regular pricing.” The result of this approach, when others are floundering, has been some of his best sales months ever.

Confidence came easily for Wittig. As a 12 year old Danish farm boy, he took the train to Copenhagen to tell The East Asiatic Company – then Denmark’s largest firm – that he wanted to work for them when he grew up. This precocious childhood stunt paid off when the firm sent him to Asia. His career took off, as he worked first in Japan and then in the Philippines. It was during this time that Wittig began to hone his unconventional, innovative approach guided by empathy. While launching the Filmora cigarette brand in Borneo, which was already popular in Malaysia, he spent weeks chatting up locals living in the most remote parts of the island; often over a drink and a smoke.

“The post-pandemic new normal will be very different – it will define a new order, distinguishing the winners from the also-rans.”

He transferred this ability to identify with the needs, desires, and habits of consumers to the Philippines. This time he personally mapped every retail outlet across socio-economic areas to create focused marketing plans and sustained sales success. He explained that this is essential for achieving growth, saying that, “Only by living the customer’s experience, can you truly understand the value of your product.”

At Dole he insisted on visiting the plantation, working 16-hour shifts to learn about the planting, harvesting and canning processes. To understand the shipping process, Wittig sailed in an old container ship to Japan in a cabin with eight locks on the door and armed with a baseball bat as protection from the livestock running around the ship.

Wittig believes that this intense motivation to get a hands-on understanding of every aspect of a business, especially the customer, is a prerequisite for any successful leader. “With this attitude, it is possible to overcome any obstacle, even the disruption caused by COVID-19,” he said. “The post-pandemic new normal will be very different – it will define a new order, distinguishing the winners from the also-rans.”

Among the far-reaching effects of this pandemic, Wittig believes will be a harsher spotlight on working teams’ attributes and attitudes, in essence, the company’s ability to adapt for success. He emphasised that building high-performance teams is about people – and empathy is mission-critical. With working from home as the current norm, the opportunities for in-person interactions have all but vanished.

“Remote working has proved functionally efficient, but it is crucial to remember the human element,” says Wittig. “Call me a Boomer if you like but when you’re meeting online, turn on the camera! I want to see my colleagues! That way, I get to know them and learn about them better.”

Results suggest that somehow, this unconventional business maverick’s ideas make sense.

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