FTSE Russell upgrades Vietnam to Secondary Emerging Market – September 2025

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Monthly Insights: FTSE Russell upgrades Vietnam to Secondary Emerging Market

Vietnam enters Q4 following a structural milestone: FTSE Russell upgrades Vietnam to Secondary Emerging Market, effective September 2026 pending an interim review in March 2026. This marks not only recognition of successful reforms in settlement, disclosure, and capital mobility, but the start of a deeper phase of market development.

The upgrade could attract billions in passive and active inflows, broaden institutional participation, and strengthen valuation support. Looking ahead, we see this as an inflection point rather than the finish line, as the government has already laid out a roadmap toward FTSE Advanced EM and MSCI EM classification by 2030, including further liberalisation of foreign ownership limits, new derivatives and hedging tools, and continued improvements to market infrastructure.

Macro conditions remain supportive. GDP expanded 7.85% in 9M25 (8.23% in 3Q25), placing Vietnam among the fastest-growing global economies. Public investment disbursement surged 30.0% YoY in September, reaching approximately $21.0bn, while disbursed FDI in 9M25 climbed 8.5% YoY to $18.8bn YTD, the highest in five years. Trade momentum remained positive, with both exports and imports in September up about 25% YoY, generating a $2.9bn surplus for the month. CPI was contained at 3.4%, with core inflation steady at 3.2%, well within the 4.5% policy ceiling. Industrial production rose 9.1% YTD, and PMI stayed in expansionary territory at 50.4 for a third straight month. 

To address the currency pressure on the VND, the State Bank of Vietnam has continued to flexibly deploy cancellable forward FX operations to stabilise the currency, which has depreciated 4.0% YTD. These moves have anchored short-term confidence, though the dong’s trajectory remains sensitive to US policy shifts, import-driven FX demand, and FDI profit repatriation.

After four months of strong gains, the Vietnam Index (VNI) abated 1.3% in September as liquidity contracted 31% MoM, with daily trading value averaging $1.3bn. Profit-taking and foreign outflows weighed on sentiment, but domestic participation kept the pullback contained. Foreign investors sold close to $1bn, bringing YTD net outflows to $4.0bn, in line with regional EM patterns. Despite this, the VNI is up 28.1% YTD in USD terms, underpinned by solid domestic participation and earnings resilience.

With Q3 earnings season underway, we expect results to come in broadly in line with expectations. Financials should remain the largest contributors, benefiting from credit expansion and trading activity, while real estate continues to recover as project launches and sales rates improve. For our Top 80 universe, we forecast 21% profit growth in 2025 and 17% in 2026. Areas to watch here include the quality of earnings (core versus one-off gains), and whether growth extends across mid-caps, as wider participation would indicate improving fundamentals rather than a narrow, liquidity-led rally.

Looking further ahead, market attention will shift to the timing and scale of FTSE inclusion flows through 2026, alongside continued reform execution that could pave the way for MSCI EM eligibility. Another potential milestone is a sovereign credit rating upgrade to full investment grade, which would lower the cost of capital, enhance the bond market appeal, and expand the pool of global institutional investors able to allocate to Vietnam. Combined with an IPO pipeline exceeding $40bn over 2026–2028, these developments should elevate Vietnam from a high-growth outlier to a core emerging-market allocation.