Vietnam has been on FTSE Russell’s watch list for a potential reclassification from “frontier” to “secondary emerging” market status since September 2018.

An October upgrade is “highly likely,” though the impact on passive funds will not be immediate, said Nguyen Trong Dinh Tam, deputy head of research at ASEAN Securities.

Speaking at a talk show on Q4 investment strategies last weekend, Tam noted that ETFs tracking FTSE’s emerging-market indices typically begin disbursements about a year after an upgrade takes effect, suggesting inflows could start in late 2026. ASEAN Securities estimates the first wave of ETF buying could exceed $680 million.

Active funds, however, may step in earlier, lured by Vietnam’s improving fundamentals. “The scale of inflows from active managers could reach several billions of U.S. dollars in the coming years,” Tam predicted

An upgrade could also drive a re-rating of key stock groups. Brokerages stand to benefit directly from higher foreign participation, while blue-chip names such as Vingroup, FPT, Masan Group, and Vinamilk could see strong ETF demand.

Tam also pointed to the pilot launch of Vietnam’s digital asset market later this year as another potential catalyst for equities in Q4/2025.

At a meeting with representatives of the London Stock Exchange (LSE) in London on Monday, Minister of Finance Nguyen Van Thang said that Vietnam has fulfilled the criteria for a stock market status upgrade by FTSE Russell through reforms aimed at facilitating foreign investment inflows into its market.

"So far, the country has met FTSE’s upgrade criteria through comprehensive reforms and decisive policies, such as issuing synchronized mechanisms and policies with immediate effect to facilitate foreign capital inflows into the Vietnamese stock market," he elaborated.

To be upgraded, Vietnam must meet nine mandatory core criteria and two non-mandatory reference criteria. These must be reviewed by the market classification organization based on actual market experiences and positive feedback from foreign investors.

HSBC analysts in a report released early September stated that Vietnam has made notable progress in meeting the requirements of FTSE to have its market status upgraded.

"We think developments on the two other issues outstanding – the Securities Law and the launch of the KRX trading system – bring Vietnam closer to an upgrade," the analysts wrote.

The bank analysts estimated an upgrade might lead to inflows of $3.4 billion. They assessed that the amount of actual flows would likely be smaller and staggered over time. $1.5 billion of inflows would come from passive funds once inclusion is completed.

"Based on our most optimist scenario, reclassification by FTSE could bring a maximum of $10.4 billion into Vietnamese equities," they added.