FTSE Russell review could upgrade Vietnam to secondary emerging market, placing it alongside China and India

The decision on Vietnam’s FTSE Russell “mid-term test” will be announced in the early morning of April 8 (Vietnam time). The review focuses on the openness of Vietnam’s stock market, with particular emphasis on expanding the role of global brokers—an element viewed as important for index-tracking operations and for meeting the needs of international investors.

What the review is assessing

In essence, the “mid-term test” centers on whether Vietnam’s market infrastructure supports index-tracking funds and international participation. A key factor is the ability for foreign investors to place orders through global brokers, supporting smoother index-tracking execution.

Vietcap’s assessment and regulatory basis

In a report released in early March, Vietcap said the probability of Vietnam failing the review was 0%. Vietcap attributed this view to the Ministry of Finance issuing Circular 08/2026 (effective February 3, 2026), which removed the final technical barriers needed to meet the requirements of index-tracking funds.

Vietcap said the change significantly reduces administrative procedures for foreign institutional investors accessing the Vietnamese market.

Broker capacity and expected index-tracking demand

Vietcap also highlighted that, under the NPF cap defined as two times a broker’s equity minus margin loan debt, the maximum NPF capacity of the five largest domestic brokers is currently nearly $5 billion.

Vietcap noted that this capacity is substantially higher than the estimated NPF demand of passive index-tracking funds, which is at least $1.5 billion.

As a result, foreign institutional investors can place orders with domestic brokerage firms through a global broker without needing to open an account with the domestic broker.

SSI Research outlook on emerging-market upgrade

Separately, SSI Research’s recent strategy report said Vietnam is on the right track to be upgraded to emerging market status in 2026. SSI Research estimated that around $1.67 billion of passive capital from global ETFs could flow into the market.

If the assessment passes, SSI Research said the market could begin attracting this capital from September 2026.

Timing and market impact

SSI Research added that the inflows are unlikely to be released in a single tranche. Instead, it expects the capital to be allocated in 3–5 installments, similar to the upgrade experience of Saudi Arabia in 2019.

SSI Research said the expected disbursements would be quarterly to limit volatility and reduce disruption to the market.

Evidence from past frontier-to-emerging transitions

SSI Research also referenced a study comparing the returns of markets that moved from frontier to emerging. The study’s results indicated that these markets typically record superior returns in the medium term, reinforcing positive expectations for Vietnam.