Vietnam Stocks Upgraded: FTSE Russell Predicts Rp106.8 Trillion Foreign Capital Inflows

KOMPAS.com - Vietnamese stocks officially entered the FTSE Russell emerging markets index on Monday.

This status upgrade marks a significant milestone for Vietnam's capital market, following years of reforms aimed at attracting more foreign investors.

FTSE Russell estimates that this change could trigger capital inflows of up to 6 billion US dollars, equivalent to around Rp106.8 trillion, into Vietnam's stock market.

Vietnam had been on FTSE Russell's watchlist since 2018 as a candidate for upgraded status, alongside China and India.

The status change has already begun rekindling foreign investor interest. Data from the Ho Chi Minh Stock Exchange showed net foreign buying of shares worth 2.7 trillion dong, or approximately Rp1.85 trillion, last week.

However, foreign investors overall still recorded net sales of about 91 trillion dong, or roughly Rp62.25 trillion, in Vietnam's stock market.

Investor enthusiasm is expected to wane somewhat after the official status change takes full effect.

Thomas Nguyen, Chief Global Markets Officer at SSI Securities Corporation, predicts market activity will slow down again ahead of 2027.

SSI Securities Corporation is Vietnam's second-largest securities firm by market share.

"I expect the market to remain relatively sluggish until we approach 2027," Nguyen said.

The transition of Vietnam’s status in the FTSE Russell emerging markets index will be a gradual process spanning through 2027.

Vietnamese stocks will initially receive a 10 percent weight allocation in the index in September 2026, followed by an increase to 20 percent in March 2027.

The weighting continues to rise by 35 percent increments in June and September 2027.

Nguyen forecasts renewed investor attention ahead of each weighting increase, with larger capital inflows likely at subsequent stages.

"As we approach the next inclusion phase in March, market interest is expected to rise again; and since fund allocations will grow, local investors will probably experience a more significant impact," Nguyen added.

Vanguard Prepares Rp44.5 Trillion Investment

The status change has also prompted several global asset managers to boost their exposure to Vietnam’s stock market.

Vanguard, a global asset management firm, plans to increase its investments in Vietnam by about 2.5 billion US dollars, or around Rp44.5 trillion, over the next few years.

Despite the growing prospects for foreign capital inflows, Vietnam still faces several challenges.

One key issue is foreign ownership limits in certain companies.

The limited availability of freely tradable shares, or free float, also remains a concern for investors.