MARKET INSIDER – Vietnam’s looming market upgrade has sparked a wave of speculation that a major foreign fund could be forced to liquidate its entire Vietnam equity portfolio — a scenario that analysts now say is based on a misunderstanding of how FTSE’s index overhaul will actually work.
Reports circulating in recent days claimed that FTSE Russell would eliminate the FTSE Frontier Index in a single step during its September 2026 review. Under this interpretation, Taiwan’s Fubon FTSE Vietnam ETF — a roughly USD 500 million vehicle tracking the FTSE Vietnam 30 Index — would be required to dump its entire holdings once Vietnam exits the frontier universe as part of its long-awaited upgrade to Secondary Emerging status.
According to Vietcap Securities, these fears are unfounded. The firm said its own cross-checks with FTSE methodology confirm that the FTSE Frontier Index will continue to exist after Vietnam’s upgrade, as other frontier markets such as Morocco, Pakistan, Oman and Peru will remain in the benchmark. Because of that, there is no “mass delete” scenario that would automatically force Fubon to unwind its Vietnam-heavy portfolio.
Vietcap added that FTSE is likely to adjust the construction rules of the FTSE Vietnam 30 once Vietnam joins the emerging-market family, allowing the index to maintain continuity and minimize disruption for trackers. Since the current constituents are the 30 largest Vietnamese companies in the frontier basket, Vietcap expects most names to remain unchanged. As a result, the firm argues that the Fubon ETF will not engage in wholesale liquidation during the September 2026 review, and therefore poses no systemic sell-off risk to the Vietnamese market.
The reassurances come after a separate note from BSC Research pointed to FTSE’s own FAQ, which states that the Frontier Index will indeed be removed in a single phase at the time of Vietnam’s reclassification. BSC warned that this could directly impact the Fubon ETF if implemented without modifications, potentially triggering forced selling across all 30 stocks it currently holds.
FTSE also published estimates of Vietnam’s potential weightings across key global indexes using data from Oct. 31, 2025 — assigning Vietnam 0.34% in the FTSE Emerging All Cap Index and 0.22% in the FTSE Emerging Index. The firm highlighted 28 Vietnamese stocks that could be candidates for inclusion, including large-caps like Hoa Phat (HPG), Vietcombank (VCB), Vingroup (VIC) and Vinhomes (VHM), as well as a mix of mid-caps and small-caps.
BSC emphasized that the current list is based on end-2024 data and will likely change significantly after the VN-Index’s strong performance in 2025. A refreshed list, based on Dec. 31, 2025 valuations, is expected early next year.
Vietnam’s upgrade to Secondary Emerging Market status remains one of the most anticipated events in Asia’s capital markets, with investors closely watching technical details that could influence billions in passive flows. For now, Vietcap’s verdict is clear: the narrative of a USD 500 million forced liquidation is more rumor than reality.
