Vietnam Stocks Surge on Market Upgrade
By Reuters | 07 Oct, 2025

FTSE Russell's upgrade of Vietnam to emerging market status drives a surge in shares of locally listed firms.

A man walks past the Hanoi Stock Exchange in Hanoi, Vietnam, April 15, 2025. REUTERS/Athit Perawongmetha/File Photo

Vietnam's benchmark stock index hit a record high on Wednesday as the government and investors alike welcomed FTSE Russell's announcement that the country was set to be upgraded to emerging market status.

The upgrade from frontier market status - a designation that prevents many passive funds from buying shares of locally listed companies - is expected to unlock billions of dollars in foreign investment as well as kick-start its IPO market. 

It puts Vietnam on par with markets like India and China and follows market-friendly reforms by the Communist-ruled Southeast Asian country.

The decision is "a milestone for the Vietnamese market ... opening the door for a new phase of development," Vietnam's State Securities Commission said in a statement.

The main stock index climbed 2% in early trade to hit a record high of 1,735, though it later pared some of those gains and was last down 0.1%. It is up by a third for the year to date, and is the best-performing stock market in Southeast Asia by a wide margin.

FTSE Russell projected that Vietnam would see $6 billion in redirected inflows following the upgrade, which will be effective September 21, 2026 pending an interim review in March.

The decision is expected to help Vietnam at a time of steep challenges presented by U.S. President Donald Trump's tariff policy. 

Vietnamese exports have been hit with a 20% tariff on U.S. imports from Vietnam since August 7, which could cut the country's exports to the U.S. by up to 20%, making it Southeast Asia's hardest-hit economy, according to a report by the United Nations Development Programme.

"FTSE upgrade of Vietnam's equity markets sends a strong signal to global investors that this export powerhouse can withstand the near-term trade headwinds," Suvir Loomba, HSBC's Regional Head of Securities Services, Asia, said in a statement. 

(Reporting by Phuong Nguyen and Francesco Guarascio; Editing by Edwina Gibbs)