The global index provider upgraded Viet Nam from frontier-market status after years of reforms aimed at improving foreign investor access, placing the Southeast Asian market alongside China and India in the category.
The inclusion will take place in four stages through 2027 to limit market disruption. Viet Nam will receive an initial 10 percent weighting this month, followed by 20 percent in March 2027. Another 35 percent will be added in June and the remaining 35 percent in September.
Viet Nam's benchmark VN-Index opened 0.54 percent higher Monday but reversed course, falling 1.26 percent to 1,792.79 as of around 2 p.m. local time.
The upgrade follows a lengthy effort to make Vietnamese equities easier for overseas investors to trade. FTSE Russell placed the country on its watch list in 2018 and confirmed in April that the change would take effect on Monday.
Foreign investors had begun returning ahead of the inclusion. They bought a net 2.7 trillion dong ($104 million) of shares on the Ho Chi Minh Stock Exchange in the week through Sept. 18, though they remained net sellers for the year.
The upgrade could also draw greater interest from large global funds. Vanguard, one of the world's largest asset managers, said last week that it expects to invest about $2.5 billion in Viet Nam over the coming years following the reclassification.
Attention is now shifting to whether Viet Nam can eventually qualify for inclusion in indexes compiled by Morgan Stanley Capital International (MSCI), another major global index provider.
Investors are watching the planned introduction of a central counterparty (CCP) clearing system in 2027. The system would place a central clearing organization between buyers and sellers to guarantee settlement and reduce transaction risk. Its introduction is expected to strengthen Viet Nam's case for meeting MSCI's market-access standards.
Further hurdles remain. Foreign ownership caps at some listed companies and the limited number of shares freely available for trading could continue to constrain overseas participation.
Even so, the upgrade gives global index-tracking funds a clearer route into the market while further reforms could improve its chances of broader international index inclusion.
The move comes as South Korean stocks rebound. Foreign investors were net buyers of 183.9 billion won ($133.5 million) of KOSPI shares on Monday afternoon, while institutions bought a net 1.35 trillion won. The benchmark was up 1.37 percent at 6,988.44 after touching an intraday high of 7,027.58.
AJP Takeaways
- Viet Nam joined FTSE Russell's secondary emerging market benchmark on Sept. 21, 2026, a change expected to draw up to $6 billion into the country's stock market.
- Viet Nam's inclusion in the FTSE Russell benchmark will be phased in through September 2027 after years of reforms aimed at improving foreign investor access.
- Foreign investors bought a net $104 million of shares on the Ho Chi Minh Stock Exchange in the week before Viet Nam's inclusion, while Vanguard expects to invest about $2.5 billion in the country over the coming years.
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