Vietnam’s stock market has been officially upgraded by FTSE Russell to Secondary Emerging Market status as of October 8, a milestone that promises strong growth, greater foreign capital inflows, and reduced reliance on the banking system.

A positive signal for capital inflows and IPO wave

At 3:00 am Hanoi time, FTSE Russell announced that Vietnam has met all key criteria, successfully advancing from Frontier Market to Secondary Emerging Market.

This marks a significant achievement for Vietnam’s stock market, reflecting its comprehensive reform efforts toward building a transparent, modern, and internationally aligned capital market.

The upgrade not only enhances the status of Vietnam’s capital market but also opens the door to substantial foreign investment, especially into blue-chip stocks of major corporations such as Vingroup (VIC), Vinhomes (VHM), Hoa Phat Group (HPG), and leading banks.

In the first nine months of 2025, Vietnam’s stock market demonstrated strong internal momentum, with a surge in liquidity. The VN-Index rose from 1,100 points in April to nearly 1,700 points (a more than 50% increase), with daily trading values reaching $2-3 billion, among the highest in Southeast Asia. This reflects robust capital flows from both individual and institutional investors, contributing to overall economic growth.

Many businesses have capitalized on the vibrant market to raise funds ahead of the upgrade.

A notable trend is the wave of initial public offerings (IPOs) by securities companies riding the market’s upswing.

Techcombank Securities (TCBS) - a subsidiary of Techcombank - successfully completed its IPO from August 19 to September 8, issuing shares at VND 46,800 per share and raising VND 10.82 trillion (approximately $410 million). TCBS’s charter capital is expected to increase to VND 23.13 trillion, with a 7.5% market share on HOSE and first-half profits of VND 2.43 trillion and an ROE of 15%.

Following suit, VPBank Securities (VPBankS) is preparing for the largest IPO in the sector. From September 15-25, it held international roadshows in Thailand, Singapore, Hong Kong, and the UK, meeting over 50 investment funds to share its development strategy and banking-parent advantages.

VPBankS plans to offer 375 million shares between October 10-31, priced at VND 33,900 per share, targeting VND 12.7 trillion ($480 million) in proceeds and valuing the firm at VND 63.6 trillion ($2.4 billion). In the first half of 2025, it posted VND 1.88 trillion in revenue and VND 900 billion in pre-tax profits.

VPS, a dominant brokerage with 16% HoSE and 50% derivatives market share, is also preparing a major IPO. With VND 5.7 trillion in charter capital and an ROE of 24.2%, VPS will issue 710 million bonus shares, offer up to 202.3 million public shares, and privately place 161.85 million shares, raising its capital to VND 16.44 trillion. In H1 2025, it earned VND 3.19 trillion in revenue and VND 1.44 trillion in net profits, focusing on sustainable brokerage services without proprietary trading.

Other firms are also increasing capital. On September 25, SSI Securities approved a 415.6 million share issuance (5:1 ratio) at VND 15,000 per share, aiming to raise VND 6.23 trillion, increasing capital to nearly VND 25 trillion – the highest in the sector. Earlier, it raised VND 3.26 trillion via private placement. VNDirect plans to hold an extraordinary shareholder meeting on October 10 to issue 432 million shares, raising capital to nearly VND 20 trillion.

These moves underscore Vietnam’s stock market as an effective fundraising platform attracting both domestic and international capital.

Strong growth reduces banking dependency

The FTSE upgrade is expected to trigger a new growth phase for Vietnam’s stock market. Despite recent foreign net selling, the emerging market status is likely to attract long-term global investment.

With a stable USD/VND exchange rate and positive macroeconomic indicators (Q3 GDP up 7.85% - the highest in 11 years excluding 2022), large capital inflows are projected. Analysts forecast that billions of USD in foreign capital could be drawn in, elevating Vietnam’s financial market position globally.

BSC Securities projects a 6-12 month transition period, after which Vietnam will aim to qualify for FTSE’s Advanced Emerging Market and meet MSCI Emerging Market criteria, potentially entering MSCI’s watchlist by 2026-2027.

This would significantly enhance the capital market’s role, which currently accounts for only a small share of total social investment.

According to the General Statistics Office, total social investment in the first 9 months of 2025 rose 11.6% year-on-year to VND 2.7 quadrillion ($102 billion). Of this, the non-state sector contributed 53.3%, the state sector 29.6% (mostly public investment), and FDI 17.1%.

By funding source, bank credit accounts for 50-60% of total investment, followed by public investment (10-15%), FDI (15-20%), private sector (10%), and stock market issuances.

This highlights the financial system’s reliance on bank lending. As of September 29, the State Bank of Vietnam (SBV) reported outstanding credit of VND 17.7 quadrillion, up 13.37% from end-2024 (VND 15.6 quadrillion), injecting about VND 2.1 quadrillion – nearly equal to all of 2024’s increase. About 78% of this credit went to business and production, with SBV targeting 19-20% credit growth in 2025.

As the stock market matures, more companies will raise funds via IPOs and share offerings, easing the burden on bank credit and diversifying capital sources. This also allows the SBV to better manage inflation (CPI rose 3.27% over nine months), maintain exchange rate stability, and support sustainable growth.

Clearly, Vietnam’s stock market upgrade is not only a milestone but a catalyst for restructuring the nation’s financial architecture.

Manh Ha