MARKET INSIDER – Vietnam’s stock market is on the brink of a historic transformation. FTSE Russell has officially confirmed that Vietnam will be reclassified from Frontier Market to Secondary Emerging Market status, with effect from September 21, 2026. The long-awaited decision, nearly eight years after Vietnam was first placed on the Watch List, signals growing investor confidence in the country’s financial infrastructure and regulatory reforms. However, the upgrade is subject to an interim review in March 2026, making the coming months critical as global investors closely watch whether Vietnam can fully meet the requirements to access international brokers and align with global market standards.
Here’s the full detail of the announcement by FTSE Russell:
Vietnam is currently classified as a Frontier market and was added to the Watch List in September 2018 for possible reclassification to Secondary Emerging market status.
The key obstacle had been the ‘Settlement Cycle (DvP)’ and the ‘Settlement – costs associated with failed trades’ criteria, both of which were rated as ‘Restricted’. In November 2024, Vietnamese market authorities addressed this by implementing a non-prefunding (NPF) model, allowing local brokers to provide Foreign Institutional Investors (FIIs) with capital support for securities purchase orders. This effectively removed the pre-funding requirement for FIIs. A formal process for handling failed trades has also been established.
The FTSE Russell Index Governance Board (IGB) acknowledged these reforms and confirmed that Vietnam now meets all criteria for Secondary Emerging market classification. However, concerns remain regarding the limited access to global brokers. While not a strict requirement for the upgrade, FTSE Russell emphasized that index users should be able to replicate the index efficiently, which requires greater participation of global brokers as counterparties.
Given this, the IGB determined that addressing the access of global brokers is essential for the reclassification to proceed. FTSE Russell noted Vietnam’s ongoing efforts to develop a model that would allow FIIs to face global brokers directly, aligning the country’s market practices with international standards, reducing counterparty risk, and strengthening investor confidence.
The reclassification will become effective on Monday, September 21, 2026, subject to an interim review in March 2026 to ensure sufficient progress has been made in enabling access to global brokers. FTSE Russell indicated that the implementation of Vietnam’s reclassification is expected to be phased in multiple tranches.
FTSE Russell will continue to monitor developments and consult with market participants ahead of the March 2026 review. Confirmation of the phased implementation plan will be announced in March 2026.
