Vietnam’s stock market upgrade boosts capital market development
Experts view Vietnam's stock market upgrade as significant as a major catalyst for reform and sustainable capital market development.
Vietnam's stock market achieved a significant upgrade on September 21, moving from Frontier Market to Secondary Emerging Market status. This development is expected to foster deeper integration of the country's capital markets into global investment flows. FTSE Russell, a global index provider, expressed optimism at a conference held on September 18, stating that Vietnam's inclusion in global benchmark indices signifies recognition of the country's economic reforms and increased integration into international capital markets.
The milestone highlights Vietnam as an increasingly vital destination for international capital, garnering growing global investor confidence in its market prospects.
The market upgrade has already positively impacted investor sentiment. Foreign investors began returning, with net purchases exceeding VND2.6 trillion (US$99.5 million) during the trading week of September 14–18, pushing the benchmark VN-Index up 20.45 points to close at 1,815.66. Experts forecast that total passive capital inflows from index-tracking funds following the upgrade could reach US$2 billion to US$3 billion, with an initial 10 percent allocation of approximately US$200 million to US$300 million expected in September alone.
Beyond passive capital, active funds and institutional investors are projected to inject an estimated US$10 billion into Vietnam's equity market over the next 12 months.
While the upgrade marks a pivotal turning point, it is crucial to maintain strict oversight to prevent market sentiment from turning into short-term speculation and inflated stock prices. Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, cautioned against overreliance on foreign capital, emphasizing that foreign investment should not be mistaken for long-term capital.
The Ministry of Finance stressed that the upgrade is a new beginning, requiring higher standards in disclosure requirements, market accessibility, and institutional investor base expansion. Authorities are also focusing on refining the legal framework, improving market openness, access, and liquidity, modernizing technology infrastructure, diversifying financial products, and strengthening regulatory oversight.
Written by urgent.news from SGGP English Edition Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
