HANOI: Vietnam remains optimistic about securing an upgrade to "emerging market" status by index provider FTSE Russell, leading to billions of dollars of new investment inflows after a sustained sell-off last year, the country's finance minister said on Friday (March 20).
Minister Nguyen Van Thang (pic) told a conference organised by Vietnam's Securities Commission that the upgrade would "significantly contribute to attracting foreign investment."
Foreign investors have continued to ditch Vietnamese equities this year, with net outflows from the Ho Chi Minh Stock Exchange totalling approximately US$920 million so far, adding to the $5 billion withdrawn in 2025, according to official data.
The move to reclassify Vietnam's economy, first announced in October last year, has yet to curb the ongoing sell-off and remains under review, with FTSE Russell expected to announce an update next month. The change is slated to officially take effect in September this year.
Le Anh Tuan, chief investment officer at private equity fund Dragon Capital Group, attributed the 2025 outflows to the concerns over US tariffs on goods imported from Vietnam, a stronger US dollar, differences in interest rates, and the global shift in capital toward artificial intelligence-focused stocks, a sector where Vietnam has minimal exposure.
"With the emerging status, the Vietnamese market could attract $2 billion to $5 billion within the next 12 months," Tuan said. He forecast Vietnam may record net foreign inflows in 2026.
The VN Index, which surged 41% in 2025, its strongest annual gain in eight years, has declined 4.8% in the year to date.
With retail investors accounting for over 90% of the participants in the Vietnamese stock market, the market remains highly volatile and prone to fluctuations, driven by events and crowd sentiment.
Thomas Nguyen, chief global markets officer at brokerage SSI, said the company had accelerated its outreach to investors and partner brokerages across global financial centers in New York, London, Singapore, and Hong Kong.
He also noted heightened interest from major institutions, including Morgan Stanley, UBS, and Barclays.
However, industry participants said Vietnam must address its restrictive foreign ownership limits, a key hurdle for future upgrades by index provider MSCI.
"Relaxing these restrictions would boost Vietnam's attractiveness and foster a more equitable market environment," said Dragon Capital's Tuan. - Reuters
