Vietnam stock market gathers pace as upgrade window opens

Vietnam’s stock market is approaching a historic inflection point. According to a report by SSI Research published on April 4, with technical input from FTSE Russell, 2026 is not only a year of growth milestones but a pivotal moment for billions of dollars in international capital to formally enter the Vietnamese market.

It noted that the market entered 2026 on a strong footing, approaching its base-case target of 1,920 points early in the year before undergoing a correction in March.

Pham Luu Hung, chief economist and head of SSI Research said: “The correction was primarily driven by profit-taking, concerns over a potential rise in domestic interest rates, and heightened geopolitical uncertainties. However, we view this as a tactical rather than structural adjustment, while the medium-term outlook remains supported by a range of strong underlying drivers.”

On macro fundamentals, SSI Research forecasts robust economic growth, with first-quarter GDP estimated to expand by 7.83 per cent on-year.

“The 10 per cent GDP growth target reflects a clear transition towards a higher-growth economic model. Accelerated infrastructure investment in transport, energy, and urban development is expected to stimulate short-term demand while enhancing long-term productivity, thereby laying a solid foundation for sustainable corporate earnings growth,” Hung told VIR.

At the same time, SSI Research expects domestic capital to rotate back into equities as alternative asset classes such as real estate and gold show signs of cooling. A strong IPO pipeline, including Highlands Coffee, CP Vietnam, and Dien May Xanh, is also expected to deepen market breadth and support liquidity.

One of the most critical structural drivers, according to SSI Research, is Vietnam’s pathway to an upgrade to emerging market status under FTSE Russell criteria.

“Vietnam remains on track for an FTSE Emerging Market upgrade this year, while an MSCI upgrade is expected to be the next medium- to long-term milestone. We expect Vietnam to pass FTSE’s interim review on April 8 and begin attracting passive inflows from September,” said Hung.

Premium/discount of the 1-year forward Price-to-Book relative to the 10-year average. Source: Bloomberg, SSI Research

SSI Research estimates that approximately $1.67 billion in passive capital from global ETF funds could flow into Vietnam.

“This capital is unlikely to be deployed in a single tranche but rather in three to five quarterly phases to minimise market disruption, similar to Saudi Arabia’s upgrade in 2019,” the report noted.

Beyond FTSE, SSI Research believes Vietnam is moving closer to meeting MSCI standards, supported by a series of regulatory reforms, including Circular 68 eliminating the prefunding requirement and Decree 245 enhancing foreign ownership transparency (FOL).

“Reforms to FOL, one of Vietnam’s key barriers, have made notable progress. The government is considering raising foreign ownership caps in sensitive sectors, such as increasing the limit in aviation from 34 per cent to 49 per cent. Many companies have also proactively reviewed or removed FOL restriction, such as LPBank,” SSI said.

“Meanwhile, further liberalisation remains under study and policy refinement. As a result, the effective FOL ratio on HSX improved from 41.71 per cent to 44.64 per cent in 2025, supported by new listings of large-cap companies with full foreign ownership capacity. If effectively implemented, Vietnam could meet 17 out of 18 MSCI criteria.”

The non-prefunding trading mechanism has been operating smoothly, while the central counterparty clearing framework remains on track for implementation, improving three key MSCI criteria: clearing and settlement, stock lending, and short selling. Although short selling of individual stocks is not yet permitted, investors can take short positions via VN30 and VN100 index futures.

SSI Research concluded that, if these reforms are effectively executed, Vietnam could meet up to 17 out of 18 MSCI criteria.

Regarding technical barriers, Hung noted that FX liberalisation remains the most significant challenge. However, he noted that while FX liberalisation was not yet complete, it was not necessarily a decisive obstacle to future upgrades.

“Achieving full exchange rate flexibility and providing unrestricted hedging instruments may take more time. However, it is important to note that several current emerging markets, including India, Indonesia, South Korea, the Philippines, Taiwan, Egypt, Brazil, and Colombia, do not fully meet this criterion,” he said.

“This suggests that while FX liberalisation is important, it may not be an absolute prerequisite for watch list inclusion or formal emerging market classification.”

SSI Research identified key investment themes for the year, including banking, specifically VietinBank, MB, and Vietcombank, along with construction materials, led by Hoa Phat Group, and IT, represented by FPT Corporation.

It also noted that state-owned enterprises with substantial cash holdings, such as PV Oil, PetroVietnam Technical Services Corporation, PetroVietnam Gas, and Binh Son Refining and Petrochemical are likely to benefit directly from a higher interest rate environment due to their significant exposure to deposit income.

“Market upgrades are expected to attract substantial foreign institutional inflows, reinforce domestic investor confidence, and improve market liquidity. Expectations surrounding these developments have already begun to influence investor behaviour and could accelerate capital inflows ahead of the official upgrade timeline,” SSI Research said.

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