Market upgrade places nation on investment map

Wanming Du, director of Index Policy for Asia-Pacific, FTSE Russell

Within hours, congratulatory messages flowed across social media and professional networks from global investors, market practitioners, policymakers, and industry peers. That collective response spoke volumes. It was more than a celebration; it was a clear endorsement from the international investment community, recognising the reform progress, open engagement, and growing confidence in Vietnam’s capital market journey.

Beyond the headlines, the inclusion of a new market into a global benchmark carries deeper and more lasting implications. While market attention often focuses on capital inflows, the impact goes well beyond that. Passive investment linked to global benchmarks tends to be steady and long term, and its presence can gradually reshape a market’s structure.

For Vietnam, this is particularly important. The market today remains largely driven by retail participation and active investment strategies. A broader passive investor base helps bring balance, introducing capital that remains invested through market cycles and providing a more stable foundation as the market continues to mature.

Vietnam has been on FTSE Russell’s watchlist for reclassification from frontier to secondary emerging market since 2018. In the early years, progress was slow and, at times, difficult to observe from the outside. What has made the difference over the past two years is not a single reform, but a shared goal and sustained commitment, supported from the highest levels and carried through across institutions.

This alignment spans the Government Office, the Ministry of Finance, the State Securities Commission, the State Bank of Vietnam, the stock exchanges, and the Vietnam Securities Depository and Clearing Corporation, as well as local and offshore market participants such as brokers and custodians, and international institutions including the World Bank and ASIFMA.

In my role leading index policy work for FTSE Russell in the Asia-Pacific region, working closely with these stakeholders has been one of the most defining aspects of this journey.

That commitment has translated into tangible actions. In November 2024, a non prefunding framework was introduced to address one of the most critical barriers for foreign investors. This was followed by the implementation of the KRX trading system in May 2025, the establishment of structured industry engagement forum shortly thereafter, and regulatory revisions in February this year that allow global investors to access the market through their international counterparties as an option.

Taken together, these steps signal a genuine willingness to listen, to open the market further, and to align more closely with international best practices.

Vietnam’s inclusion into FTSE Russell’s global benchmarks will be implemented through a phased approach (see box). Phasing is a well established practice and has been applied in other market inclusions such as Iceland, Saudi Arabia, and China.

Its objective is clear: to allow markets, investors, and infrastructure providers time to adjust in a measured way, particularly given the significant amount of global assets tracking emerging market indices. This approach helps minimise market disruption, supports orderly portfolio transitions, and reinforces confidence in the benchmark inclusion process.

Looking beyond inclusion, the reform agenda continues. Vietnam’s market authorities remain committed to further strengthening market infrastructure and efficiency, including advancing central counterparty clearing and adopting global best practices such as omnibus account structures. These reforms matter not only for operational efficiency, but also for sustaining long term institutional investor confidence.

Vietnam has come a long way from early discussions and gradual progress to global recognition and FTSE Russell index inclusion. This milestone places Vietnam more firmly on the global investment map, not just as a fast growing economy, but as a market steadily aligning with international standards. The journey has required perseverance, collaboration, and vision and the future, by any measure, looks bright.