Key Takeaways:

• Vietnam is modernizing its trading infrastructure and working to improve foreign investor access.
• FTSE EM status may come in 2025, with MSCI inclusion targeted by 2030 as reforms accelerate.
• Strong growth and policy momentum position Vietnam as a key market in Asia’s evolving landscape.

Vietnam’s Market Reforms: Why Investors Should Pay Attention

Vietnam is one of Asia’s most dynamic economies. Strong growth, ambitious reforms, and improvements to its capital markets are helping the country progress toward potential inclusion in global emerging market indices. For investors, this may be an opportune moment to consider exposure to Vietnamese equities.

Vietnam’s Economic Growth

Vietnam has delivered decades of consistent GDP growth, averaging approximately 6.4% annually since 1985.¹ This economic momentum is rooted in structural trends and driven by geopolitical influences that have propelled the country forward. Vietnam is home to a young, educated population with a median age of 33 years and a high literacy rate of about 96%. A sizeable working age population with growing incomes has led to rapid urbanization, supporting the country’s economic growth trajectory.

Vietnam has proactively entered multiple free trade agreements to deepen its integration into global trade and reduce its export reliance on a single country. It intends to sign two new agreements with Mercosur² trading bloc and GCC² by year-end. Despite 20% U.S. tariffs, Vietnam's exports in the year to September 15th rose 15.8% from a year earlier to $325.3 billion.³

Free Trade Agreements

EVFTA: European Union – Vietnam Free Trade Agreement.VEUFTA: Vietnam Eurasian Economic Union Free Trade Agreement. CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership. VJEPA: Vietnam – Japan Economic Partnership Agreement.RCEP: The Regional Comprehensive Economic Partnership. VKFTA: Vietnam – Korea Free Trade Agreement.ASEAN: Association of Southeast Asian Nations. AFTA: ASEAN Free Trade Agreement.AFTA – China: ASEAN – China Free Trade Agreement.UKFTA: The United Kingdom – Vietnam Free Trade Agreement.VCFTA: Vietnam- Chile Free Trade Agreement.

Market Reforms: Structural Changes to Unlock Foreign Capital

In recent years, Vietnam has enacted a broad suite of reforms aimed at attracting institutional and foreign investors, aligning its capital markets with international best practices.

Reforms Include:

• Removal of Company-Imposed Foreign Ownership Caps (Sept 2025):
  A newly enacted decree that went into effect on September 11, 2025, prevents public companies from arbitrarily setting their own lower foreign ownership limits (FOLs). It also requires companies to officially report their maximum foreign ownership limits within 12 months.The decree does not create a single new foreign ownership cap but instead corrects prior rules that allowed companies or their shareholders to impose stricter limits than required by law.Companies that previously implemented lower caps may now increase them, perhaps gradually, to align with legal ceilings. Similarly, companies that have not consistently disclosed their FOLs will be required to officially report their foreign ownership limits to the market. This reform is expected to improve foreign investors’ access and increase transparency on FOLs of publicly listed companies.
• Elimination of Pre-Funding Requirement (Nov 2024):
  Overseas investors no longer need to fully pre-fund equity trades, removing a long-standing obstacle for foreign inflows. Under Vietnam’s old system, foreign investors had to fully transfer cash to a domestic account before trade execution. This tied up liquidity and created the risk of failed trades if orders were not matched.
• Launch of KRX Trading System (May 2025):
  Vietnam’s new securities trading and post-trade system, KRX, developed in partnership with the Korea Exchange, replaces the country’s legacy infrastructure. The modern platform can handle higher trading volumes and shorten trade settlement cycles. More importantly, it paves the way towards central counterparty clearing (CCP) that will allow Vietnam to meet global trade settlement standards.
• IPO Acceleration Reforms (Sep 2025):
  The Vietnamese government has streamlined the IPO and listing procedures, reducing the time for shares to debut on the exchange from 90 days to just 30 days. The government hopes this initiative will encourage major state-owned enterprises and large private companies to list their shares. This, in turn, will expand the market’s size and make it more attractive to foreign investors.
• Ongoing English Disclosure Rollouts (Sep 2025):
  Regulations are being phased in, requiring all listed firms to publish financials and filings in English. These measures are aimed at boosting transparency and attracting more foreign investment to Vietnam’s capital markets.

Meeting FTSE’s Criteria: Why an Upgrade to E.M. May Be on the Horizon

Vietnam has been on FTSE Russell’s watchlist for secondary emerging market status since 2018. Under FTSE Russell’s system, Secondary Emerging market status is a classification between Frontier and Advanced Emerging. It applies to markets that meet requirements for quality (infrastructure, settlement, capital repatriation) and size, including sufficient eligible securities for the FTSE Emerging Index, but fall short of Advanced Emerging standards. As of mid-2025, analysts and investors widely expect the country to receive an upgrade in September 2025. The country’s compliance with funding standards, enhancements in settlement and trading infrastructure along with meaningful progress on foreign investor access, makes it a strong contender for an upgrade.

FTSE estimates that reclassification could trigger up to $6 billion in capital inflows into Vietnamese equities.⁴ In addition, The World Bank has estimated that an upgrade to emerging market status and inclusion in global indices could help Vietnam attract $25 billion in international capital inflows by 2030.⁵

What Vietnam Still Needs to Do for MSCI Emerging Market Status

Vietnam's government has approved a comprehensive plan to meet MSCI's emerging market (EM) criteria by 2030. The roadmap involves a series of market and regulatory reforms designed to modernize the country's stock market, attract foreign investment, and increase liquidity.

While FTSE may upgrade Vietnam, MSCI Emerging Market inclusion remains a longer-term target for the country. As reforms accelerate, including the introduction of securities lending, a central clearing system, stronger disclosures, and greater regulatory consistency, Vietnam’s market is positioning itself for broader global recognition. This creates a timely opportunity for investors to gain exposure ahead of a potential re-rating.

Why This Is a Timely Moment to Own Vietnam

Vietnam’s benchmark VN Index has already surged approximately 30% year-to-date⁶, outpacing all major Southeast Asian peers. Investor enthusiasm in the market is being driven by a clear policy momentum, a wave of reclassification-fueled inflows and relatively attractive equity valuations compared to other EM/Asia peers.

Vietnam has emerged as a reform-driven, globally integrated, and fast-growing economy with a clear commitment to global best practices. Ongoing market reforms, index upgrades on the horizon, and strong economic fundamentals make a strong case to gain exposure to Vietnamese equities.

How to Invest

VanEck Vietnam ETF (VNM) provides access to the growth story of Vietnam and could be an appealing investment for investors seeking growth exposure outside of traditional emerging markets. VNM, the largest and most liquid⁷ U.S.-listed Vietnam ETF, provides investors with one trade access to the Vietnamese market.

To receive more Emerging Markets Equity insights, sign up in our subscription center.