This reclassification is seen as a significant opportunity to attract investment flows from both domestic and international sources.
According to data from the Ho Chi Minh City Stock Exchange (HoSE), the total transaction value of foreign investors in January 2025 exceeded 46.27 trillion VND (1.815 billion USD), accounting for more than 12% of the market’s total trading value. Notably, foreign investors recorded a net sell-off of over 6.47 trillion VND (253.8 million USD), marking a strong capital withdrawal from Vietnam’s stock market.
Billions of USD in foreign capital poised to flow into the market
Amidst this situation, Deputy Minister of Finance Nguyen Duc Chi emphasised that Vietnam's stock market must step up its efforts in 2025, particularly in meeting the criteria for an upgrade from a frontier to an emerging market. This transition is expected to attract billions of USD in foreign investment.
To achieve this, administrative procedures must be further streamlined and the accountability of relevant agencies enhanced. Notably, delays in listing should no longer be a concern for businesses, organisations, and investors, as they hinder capital-raising opportunities. The current concept of "applying for listing" should be transformed into "inviting listings" for high-quality and large-scale enterprises.
In reality, the upgrade of stock market is a key government policy, receiving close attention and direction from the prime minister, with a targeted implementation by 2025. This initiative is also a strategic task within the broader stock market development plan, aimed at fostering sustainable economic growth.
Reflecting on the efforts to enhance the stock market over the past year, the National Assembly (NA), the Government, and regulatory bodies have introduced several crucial policies. The NA passed amendments to the Securities Law as part of Law No. 56/2024/QH15. In 2025, the securities sector will continue refining the legal framework, drafting decrees and guiding documents to implement the revised Securities Law, and executing the Stock Market Development Strategy until 2030.
Especially, the newly introduced Circular 68/2024/TT-BTC has removed several barriers, creating favourable conditions for Vietnam’s stock market to meet FTSE Russell’s upgrade criteria. A notable change is the elimination of the prefunding requirement for foreign investors and the introduction of a phased roadmap for mandatory English-language disclosures, depending on company size.
According to Young Lee, Managing Director of Asia Equity Trading at Morgan Stanley, the new regulations outlined in Circular No.68 have aligned Vietnam’s stock market more closely with FTSE Russell’s standards. Additionally, key adjustments in market mechanisms and policies — particularly the removal of the requirement to have sufficient funds before placing orders — have been well-received by international investors, further strengthening Vietnam’s market appeal.
In FTSE Russell’s most recent review in September 2024, Vietnam successfully met 7 out of 9 upgrade criteria, with only two outstanding issues: the removal of mandatory prefunding for foreign investors and the management of failed trades. However, with the updates from Circular No.68, Vietnam now has only one final criterion left to meet before achieving full compliance with FTSE standards.
Young Lee highlighted that if Vietnam’s stock market is upgraded to an emerging market, it could attract approximately 800 million USD from passive investors following FTSE indices, and an additional 2 billion USD from passive investors tracking other benchmarks. Furthermore, with the upgrade, actively managed funds are expected to significantly increase their participation, potentially bringing in 4–6 billion USD from additional capital inflows.
Anticipated IPO boom in 2026-2027
Barry Weisblatt David, Head of Research at VNDirect Securities JSC, views Circular No.68 as a pivotal step reflecting Vietnam's strong commitment to attracting foreign capital into its stock market. He believes this regulatory shift will contribute to making Vietnam an increasingly attractive investment destination.
According to him, Circular No.68 will have two major impacts on Vietnam’s market upgrade prospects in March 2025. The immediate effect will be a surge in fund managers allocating more capital to Vietnam due to improved cost efficiency, particularly benefiting regional funds and those specialising in frontier and emerging markets.
The larger indirect impact lies in the possibility that FTSE Russell may announce Vietnam’s upgrade to emerging market status in March. Such an announcement would boost investor sentiment and trigger strong buying activity from retail investors.
Barry Weisblatt David anticipates that once Vietnam secures the upgrade in September 2025 and its companies are included in emerging market indices, substantial inflows from emerging market ETFs will follow. While estimates vary, he projects that capital inflows could range from 500 million USD to nearly 1 billion USD.
Meanwhile, Le Anh Tuan, Chief Investment Officer at Dragon Capital Group, predicts that after the market upgrade, Vietnam could witness a wave of IPOs on an unprecedented scale. The most anticipated period for this boom is 2026-2027, with an expected total IPO volume reaching tens of billions of US dollars.
Tuan has highlighted several major corporations, including Thaco Auto, Bach Hoa Xanh, Golden Gate, Highlands Coffee, TCBS, Misa, VNPay, Viettel IDC, Long Chau Pharmacy, Datviet Vac, and Galaxy Media. These companies are expected to attract both domestic and international capital, making Vietnam a more appealing investment destination, especially after its elevation to emerging market status.
However, a key challenge remains that how Vietnam can maximise its upgraded status. Addressing this concern, Nguyen Hoai Thu, CEO of Securities Investment at VinaCapital, emphasised that the most critical factor is to maintain macroeconomic stability, enhance the quality of listed companies, and strengthen market regulation.
She stresses the need for listed firms to improve corporate governance, ensure transparency in financial disclosures, and enhance operational efficiency to solidify investor confidence. Additionally, regulators must continue reforming policies, refining regulations, and strengthening oversight mechanisms to safeguard investor rights and promote sustainable market growth.
Currently, the long-anticipated KRX trading system project is in its final preparation phase for launch in the near future. In January 2025, HoSE introduced the HoSE Index Rulebook version 4.0, replacing version 3.1; it is set to take effect in March 2025 — a move that will further modernise Vietnam’s financial infrastructure.
