FTSE Review Imminent for Vietnam Stocks Amid Persistent Foreign Outflows

Vietnam Awaits FTSE Russell's Decision on Emerging-Market Status Upgrade

Investors are eagerly awaiting FTSE Russell's final decision on upgrading Vietnamese equities to emerging-market status, a move that could help stem record levels of foreign selling. The index provider, which raised Vietnam to secondary emerging market status from frontier in October, is set to unveil the results of its interim review for the Southeast Asian country's shares on April 7. If all criteria are satisfied, FTSE will outline an implementation roadmap for the upgrade, with reclassification taking effect in September.

Overseas investors have withdrawn about $1.1 billion from Vietnamese equities in the three months to March, marking the biggest first-quarter outflow on record, according to data compiled by Bloomberg. This is despite traders having bet on improving foreign flows ahead of the change. In contrast, overseas investors have pulled $1.95 billion from Indonesia but remain net buyers in Malaysia, the Philippines, and Thailand.

A successful upgrade could bring significant inflows to Vietnam's equities market. Maybank Investment Bank estimates that any FTSE upgrade could be phased in across three to five tranches starting in September, with each tranche attracting roughly $300 million to $500 million in inflows. This could help boost Vietnam's benchmark VN Index, which has slid 4.6% this year. While it outperformed Southeast Asian peers in 2025 with a 41% surge, it is now lagging most of them due to concerns that the Middle East conflict will weigh on the nation's economy.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Vietnamese authorities have stepped up reforms to improve market accessibility, including removing pre-funding requirements for equity trades, raising foreign ownership limits at selected banks, and advancing plans for a centralized clearing system by 2027. Regulations introduced in February allow foreign investors to trade via global brokerages rather than relying solely on local firms.

Market watchers remain broadly optimistic ahead of the review, with many expecting "no surprises" and Vietnam to clear the interim hurdle and work toward implementation. The nation is also targeting a similar reclassification by MSCI Inc. before the end of the decade.

Analysts say the status change would validate years of progress in modernizing Vietnam's capital markets infrastructure. Estimates suggest passive inflows alone could reach $1 billion to $1.5 billion shortly after inclusion, while Maybank projects total foreign inflows of $6 billion to $8 billion over the longer term. FTSE in November said Vietnam was projected to account for 0.34% of its emerging all-cap gauge, based on 2024 data. It also listed Vingroup, Masan Group, and Hoa Phat Group among potential joiners. The final lineup of eligible firms will be published before FTSE's semi-annual index review in September.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline