How Far Could Vietnam’s Stock Market Soar if It Is Upgraded?

Vietnam Insider – Market experts are placing high hopes on the upcoming reclassification of Vietnam’s stock market. A potential upgrade could trigger a strong return of foreign capital as concerns over exchange rates ease.

Foreign Capital Could Flow Back Strongly

The VN-Index has surged 25.9% in just three months since early June, reflecting investors’ optimism about Vietnam’s economic and corporate outlook. The focus is now on the FTSE Russell’s upcoming market reclassification review, scheduled for October 7.

Speaking at a September 17 event, Lê Thành Hưng, Chief Investment Officer at UOBAM Vietnam, expressed confidence that Vietnam’s stock market could achieve an upgrade in the upcoming review. He highlighted the government’s strong determination to meet the criteria.

If the upgrade occurs, foreign capital inflows are expected to accelerate, boosting market liquidity and improving fundraising capacity for listed companies. Such a milestone would also strengthen investor sentiment domestically, encouraging local money to remain the market’s main driver.

Vietnam’s regulators are simultaneously pushing forward reforms in trading and settlement systems, foreign ownership rules, and the legal framework. These steps are laying a more sustainable foundation for the market and preparing it for a future upgrade under MSCI standards.

Economic Backdrop Remains Supportive

Looking ahead to year-end, experts maintain a positive outlook based on solid economic growth, robust public investment, and continued monetary easing. Vietnam’s government is targeting 16% credit growth to help achieve GDP expansion of 8.3–8.5% this year.

Legal bottlenecks in the real estate sector are being gradually resolved, restoring market confidence. At the same time, U.S. tariff risks have eased, supporting Vietnam’s export competitiveness and stabilizing foreign direct investment inflows.

In a recent report, HSBC estimated that in an optimistic scenario, an FTSE upgrade could attract up to US$10.4 billion in foreign capital inflows. However, actual investments are likely to be smaller and phased in over time.

Hanoi Stock Exchange. Photo: Duong Ngoc Dung

What Should Retail Investors Do?

Despite the market’s strong rally, foreign investors have recently been net sellers. As of the end of August, they recorded net sales worth 74 trillion VND (approx. US$3 billion), with more than half of that in August alone. The main drivers were exchange-rate concerns and profit-taking.

However, Mr. Hưng expects exchange-rate pressure to ease toward year-end as the U.S. Federal Reserve begins cutting interest rates, weakening the U.S. dollar and supporting the Vietnamese đồng. If currency risks subside, foreign capital is likely to return strongly, given Vietnam’s medium- to long-term growth prospects.

For late-2025 investment strategies, Mr. Hưng recommended focusing on domestically oriented sectors that are less dependent on exports and benefit directly from the government’s expansionary fiscal and monetary policies. These include:

• Banking – benefiting from higher credit growth targets.
• Securities – gaining from a potential market upgrade and the licensing of digital asset exchanges.
• Construction & building materials – supported by accelerated public investment disbursement.
• Retail & consumer goods – fueled by stronger domestic demand and a recovery in international tourism.
• Real estate – improving as legal bottlenecks are gradually removed.

Phan Dũng Khánh, Investment Advisory Director at Maybank Investment Bank, told Dân Trí that foreign net selling is temporary, largely due to profit-taking after the market hit new highs. With Vietnam’s open stance toward foreign capital, he expects net buying to return in the medium and long term.

Investment expert Dương Ngọc Dũng added that late August to early September saw a slowdown from profit-taking, with some investors adopting a “sell the news” mindset ahead of the September 2 holiday. However, as the October 7 FTSE announcement approaches, the upgrade story is becoming a stronger market catalyst.

He expects Vietnam to secure the FTSE upgrade, sparking a renewed rally led by financial, securities, and banking stocks. The upgrade, combined with robust macroeconomic fundamentals—economic growth, expanding credit, and rising corporate earnings—would mark a major turning point.

According to VPBankS, the reclassification would provide a new momentum going into the fourth quarter, just as companies begin releasing earnings results. Historically, stocks of firms with strong profit growth tend to rise 15–20 days before announcements, making now a critical time for investors to position their portfolios.

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Source: Vietnam Insider