A visit by Finance Minister Nguyen Van Thang and his delegation to the UK has captured investor attention, signaling a potential turning point as many investment channels remain risky.

A ‘New Year’s Eve’ moment for stock investors

On the night of September 15 (Vietnam time), a landmark event took place in London as the Vietnam Stock Exchange (VNX) signed a Memorandum of Understanding (MoU) with FTSE International Limited (FTSE), witnessed by Finance Minister Nguyen Van Thang, Vietnamese Ambassador to the UK Do Minh Hung, representatives from the State Securities Commission of Vietnam (SSC), and the London Stock Exchange (LSE).

This agreement marked the beginning of a strategic partnership to improve Vietnam’s capital market infrastructure and accelerate international integration.

The event was dubbed by investors as the “New Year’s Eve” for Vietnamese stock market players.

The MoU with FTSE Russell, a global index provider under the LSE Group, represents a significant step toward Vietnam’s goal of upgrading its stock market status from “frontier” to “secondary emerging market.” FTSE Russell is expected to announce the reclassification in its upcoming annual review this October.

This development is not only a technical milestone but also a strategic move to attract foreign capital and boost Vietnam’s global financial standing.

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Vietnamese delegation signs MoU with FTSE in London. Photo: SSC

Investors greeted the news with enthusiasm. On the morning of September 16, strong inflows pushed the VN-Index up by over 12 points (+0.8%), nearing the 1,700 mark. This reflected rising market optimism about Vietnam’s prospects for a market upgrade and increased foreign investment by 2025.

However, some analysts cautioned that the market may have already priced in the upgrade news, as both institutions and individual investors had anticipated it and may now seek to take profits.

Additionally, net foreign outflows of over VND 5,000 billion (about USD 205 million) from September 8 to 12 and VND 1,400 billion (USD 57 million) on September 15 showed ongoing caution among investors, suggesting the market may need more time to fully absorb the news.

Stock market shines as real estate risks loom

Vietnam’s stock market has made significant strides recently. According to the Ministry of Finance, the total market capitalization of listed stocks reached approximately USD 352 billion by the end of 2024, equivalent to 79.5% of estimated GDP.

Trading liquidity has surged, with some sessions surpassing USD 3 billion in total value. The average daily trading volume this year has exceeded USD 1.1 billion, placing Vietnam among the most active markets in Southeast Asia.

Minister Nguyen Van Thang stated that Vietnam has implemented major reforms and issued comprehensive policies to meet FTSE Russell’s 9 core and 2 reference criteria, aiming for a status upgrade by 2025.

Julia Hoggett, CEO of the London Stock Exchange, expressed confidence in Vietnam’s growth potential. She noted that the MoU would not only improve infrastructure but also promote initiatives such as index development, adoption of international governance standards, disclosure practices, and ESG-driven sustainable growth.

Vietnam is also learning from the LSE’s experience to develop new products like green bonds, sustainable bonds, and derivatives, helping diversify investment portfolios.

Vietnam’s stock market continues to attract attention as an appealing channel amid the declining appeal of other investments, particularly real estate. Property prices in Hanoi and Ho Chi Minh City have soared, especially in the luxury apartment, residential land, and land lot segments.

In Hanoi, residential land prices in some areas have jumped by 50% within a year, while average apartment prices have hit VND 80 million/m² (around USD 3,280), or roughly USD 165,000 per unit. Ho Chi Minh City and surrounding urban zones have witnessed similar surges.

These steep prices pose serious risks, including speculative bubbles, declining liquidity as affordability shrinks, and potential market instability if not well-managed.

Meanwhile, loose monetary policy continues to inject capital into the economy. Low interest rates and massive public investment have spurred new project launches across the country.

Still, despite the positive momentum, some experts note that FTSE Emerging Markets (EM) funds don’t allocate heavily to secondary emerging markets, potentially limiting immediate capital inflows following the upgrade.

Also, foreign investors have continued their net selling trend in recent weeks, which reflects lingering caution. Therefore, even with the upgrade, foreign investment may not surge as expected.

Finally, the market may experience a “buy the rumor, sell the news” scenario as the official announcement approaches in October 2025.

Manh Ha