Vietnam says FTSE Russell's emerging market status confirmation is a significant milestone

HANOI, April 8 (Reuters) - Vietnam's stock market regulator said on Wednesday that FTSE Russell's confirmation of Vietnam's emerging market status is a significant milestone, with authorities expecting the long-awaited upgrade to help draw more foreign investment into the Southeast Asian economy.

FTSE Russell said it will upgrade Vietnam to emerging market status from frontier status in September, when it will start adding the country to its global equity indices in a phased manner.

"It contributes to attracting large-scale international investment flows, enhancing liquidity, and strengthening Vietnam's position in the global financial system," the State Securities Commission said in a statement.

However, foreign investors have sold Vietnamese equities this year, with net outflows from the Ho Chi Minh Stock Exchange totalling approximately $1.21 billion so far, after net outflows of $5 billion in 2025, according to official data.

"As inclusion approaches, trading activity and foreign participation should increase, with potential short-term volatility around rebalancing periods. Over time, these dynamics are expected to translate into a higher valuation floor and more stable index performance," Maybank Securities said in a note following the announcement.

Vietnam's benchmark stock index .VNI is down 6% so far this year as the war in the Middle East has hurt sentiment. It surged about 41% in 2025, its strongest gain in eight years, as the export-reliant nation posted economic growth of 8%.

($1 = 26,305 dong)