Vietnam moves closer to long-anticipated market enhancement
Vietnam is making significant strides in its journey towards becoming a secondary emerging market, with a series of reforms aimed at attracting more foreign investment and improving market transparency.
The amended Securities Law, effective from late 2024, will remove the pre-trade cash deposit requirement and introduce mandatory English-language disclosures. Additionally, revisions to the Law on Investment and related decrees are being prepared, with a focus on raising foreign ownership caps in non-sensitive sectors, a long-standing request from international investors.
The Ministry of Finance (MoF) and the State Securities Commission (SSC) have introduced measures to improve transparency. A draft amendment to Decree No.155/2020/ND-CP requires all public companies to disclose their foreign ownership limits within a year of enactment.
HSBC estimates that Vietnam could pull in more than $10 billion in additional inflows if reclassified as a secondary emerging market. This estimation is supported by the strong performance of Vietnam's benchmark stock index, which has risen by about 40% since the start of the year, placing it among the strongest-performing indices worldwide.
FTSE Russell is currently assessing Vietnam for potential reclassification from a frontier market to a secondary emerging market status. FTSE's director of Policy, Wanming Du, highlighted Vietnam's rapid reform trajectory and its advancement from a frontier market to a regional leader in liquidity. Du mentioned that Vietnam is advancing rapidly with regulatory reforms, digital innovation, and sustainable finance, making it one of the world's most attractive investment destinations.
The ambition to graduate from the frontier group has influenced policy direction in Vietnam for several years. The two remaining conditions for reclassification, the settlement cycle and costs associated with failed trades, are also advancing in Vietnam.
Predictability, transparency, and operational consistency will be decisive in the October 2025 review. The FTSE's decision will not solely depend on technical compliance, but also on generating confidence in practice among global investors and brokers. The results of the assessment will be announced in the FTSE's September 2025 Equity Country Classification Annual Report.
Domestically, policymakers have reaffirmed their determination to secure the upgrade, with the target being to achieve reclassification this year. However, there are no specific public details available about which global investors and brokers FTSE will consult in its October 2025 review to assess comprehensive reforms in Vietnam that go beyond laws and regulations to create practical trustworthiness.
Du stated that FTSE indices, which underpin trillions of US dollars in assets, are managed under a transparent and rigorous classification system. The technical infrastructure has been upgraded with the launch of the KRX trading system in May.
The FTSE's involvement goes beyond periodic assessment, as they help shape markets. With these reforms in place, Vietnam is well on its way to becoming a secondary emerging market, attracting more foreign investment and solidifying its position as a major player in the global economy.
