Following FTSE Russell’s latest interim review, Vietnam has been formally confirmed for an upgrade from Frontier Market to Secondary Emerging Market status, with implementation scheduled for 21 September 2026. This marks a key milestone for the country’s capital markets, reflecting several years of regulatory and operational improvements aimed at making the stock market more accessible to international investors.
Recent developments, such as the introduction of the global broker model and continued progress in settlement and trading mechanisms, have addressed key requirements for index inclusion. These changes reduce operational barriers and make it easier for foreign investors to access the market.
Market classification plays an important role in how global capital is allocated. Many institutional investors, including large asset managers and index-tracking funds, allocate capital based on benchmark classifications such as Frontier or Emerging Markets. An upgrade to Emerging Market status allows Vietnam to enter a broader investment universe, making it eligible for a wider pool of global capital.
In practice, the upgrade will take place in four phases from September 2026 to September 2027, allowing the market to absorb incoming capital in a controlled manner. We expect foreign institutional participation to increase across these phases, with flows concentrated in stocks with large market capitalization, strong liquidity, and high foreign ownership limits.
A broader investor base is typically associated with improved liquidity and valuation support over time. This is expected to benefit companies that deliver strong earnings visibility and maintain high standards of governance. These are also the characteristics we focus on in our portfolio construction.
The presence of consumer-oriented companies on FTSE Russell’s preliminary inclusion list, including several of our portfolio companies, also reflects increased investor confidence in Vietnam’s domestic consumption as a key economic driver.
The Kenno Vietnam Fund invests in high-quality consumer companies that benefit from Vietnam’s resilient economic growth and an expanding middle class driving domestic consumption. If you’re looking for exposure to one of Asia’s fastest-growing economies, feel free to reach out to us.