(Market Insider) – Vietnam is on the verge of a historic reclassification in global equity benchmarks, with strong backing from leading asset managers in FTSE Russell’s September consultation, according to people familiar with the matter.
Overwhelming Support From Global Institutions
Early voting indicates that around 85% of the 26 major funds consulted have endorsed Vietnam’s move from Frontier Market to Secondary Emerging Market status. Supporters include some of the world’s largest investors: BlackRock, Vanguard, and State Street, each citing greater liquidity and stronger regulatory alignment.
While Fidelity and PIMCO voted cautiously in favor, both highlighted the need to monitor the rollout of the KRX trading platform, scheduled for the second quarter of 2026. Only two small Asia-based funds opposed the upgrade, pointing to trade frictions between the U.S. and Vietnam, where a 20% tariff remains under discussion.
Structural Improvements Fuel Optimism
- Market liquidity has climbed 15% quarter-on-quarter, strengthening Vietnam’s case for accessibility.
- The Non-Prefunding (NPF) model has been implemented successfully, removing a key obstacle for foreign investors.
- Decree 245/2025/ND-CP has eased concerns over foreign ownership limits (FOL) and currency risk.
- FTSE Russell acknowledged Vietnam’s progress in trading infrastructure upgrades and market transparency.
$5–7 Billion in Initial Passive Inflows
If confirmed, analysts estimate Vietnam could see US$5–7 billion in passive inflows, with active capital allocations to follow. This would position Vietnam as one of the fastest-growing markets in Asia for foreign portfolio investment and set the stage for a potential upgrade by MSCI in the longer term.
Decision Date Approaching
The official FTSE Russell announcement is expected after U.S. market close on October 7, 2025. If approved, Vietnam would join the FTSE Secondary Emerging Index in March 2026, a milestone that could reshape capital flows into Southeast Asia’s fastest-growing economy.
