Vietnam's stock market is about to enter the EM market, supporting global funds to buy another billion dollars.

“Vietnam Stock Market” is about to enter the EM market, supporting global funds to buy another billion dollars, reflecting the Vietnamese government’s support for market reform and increased negotiations between agencies and foreign investors.

October 28, 2567 CNBC reported that Vietnam is currently a frontier market and has been on the FTSE Emerging Market Watch List since 2561. FTSE Russell, a global index compiler, confirmed in early October 2567 that it still includes Vietnam on the watch list.

FTSE Russell has reiterated the government's support for Vietnam's market reforms and recommended more meetings between local authorities and international investors. The upgrade to emerging market (EM) status will see global funds pour billions of dollars into Vietnam's financial markets, which currently have a market value of slightly more than $2 billion.

Thanh Quan Trong, Head of Equity Research at Maybank Investment Bank Vietnam Speaking to CNBC's "Street Signs Asia" prior to the confirmation, he said: Vietnam's FTSE upgrade to emerging market status could happen as early as September 2568

That's a similar goal that Vietnamese Prime Minister Pham Minh Chinh set earlier this year. FTSE Russell recommends the country stick to its current pace of reforms if it wants to meet that target.

In Said to CNBC: “We are seeing good progress in Vietnam in addressing regulatory bottlenecks to transform the market into an emerging market,”

The Vietnamese government is renewing its focus on the economy, which it says will benefit the economy with a projected GDP growth of at least 6.2% in 2568. The World Bank projects GDP growth of 6.5% in 2568, boosted by rising global demand and renewed consumer confidence in the country.

According to the Vietnam Institute of Economic Policy and Research, GDP growth in the fourth quarter of 4 is expected to reach 2567%, which is in line with the government's target of 7.4%.

while Christine Philpotts of Ariel Investments Tell CNBC that “Vietnam is in a relatively good position because it relies less on foreign capital or has less foreign debt, so it has become a relatively safe place for investment.”

The Vietnamese government is prioritizing AI development, leveraging its strengths in assembly, testing, and packaging to meet global chip demand. The country’s national strategy includes an ambition to develop into an ASEAN AI solutions R&D hub by 2573. For example, the country has already attracted $1 billion in investment from South Korean manufacturing through 2568.

Vietnam’s chip capabilities have allowed it to compete with neighboring Malaysia and attracted global semiconductor companies to settle there. It is also home to major manufacturing hubs for Samsung and Foxconn.

Despite domestic political conflicts, the country has already benefited from the US-China trade dispute, as companies try their best to protect their supply chains. Vietnam is likely to continue to build a strong position in the global manufacturing supply chain.

Helmi Arman, Chief Economist at Citi Financial Research Group Said to CNBC: “China has the geographical advantage of being close to China on the one hand, but at the same time having access to export markets in developed countries on the other. This latter advantage is the result of having a large number of free trade agreements.”

Vietnam's political neutrality gives it an advantage in taking advantage of the dynamics in US-China relations by attracting investment from Chinese parent companies for re-exports to the US.

Bill Hayton, Associate Researcher at Chatham House's Asia Pacific Programme, a UK think tank. said “Overall, Vietnam is doing well at the moment. In some ways, it has to do with the slowdown in China. With so many China+1s, companies are hedging and expanding in Vietnam, which has an impact on China and is positive for Vietnam’s economic growth numbers.”

On the other hand, Vietnam’s shortage of skilled labor and concerns about infrastructure, particularly its long-standing concerns about the stability of its electricity supply, pose obstacles for foreign investors.

Meanwhile, sweeping reforms have allowed the government to crack down on corruption, with local media calling it a “hot furnace”, resulting in the arrest of officials accused of taking bribes.

Vietnam ranked 83rd out of 180 countries in Transparency International’s 2566 Corruption Index, outperforming Asian neighbours Thailand (108th), Cambodia (158th) and Laos (136th).

While Vietnam has capitalized on the US-China conflict, Hayton sees the Southeast Asian nation as being at the mercy of global events such as the Russia-Ukraine war and the ongoing Middle East crisis. The US election in November could also have a negative impact on Vietnam.

refer : cnbc.com

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