Vietnam’s Emerging Markets Upgrade: A Catalyst for Investment
Vietnam is on the brink of a transformative shift in its economic landscape, as it prepares to be officially upgraded to “emerging markets” status by FTSE Russell in 2026. This change is expected to be a powerful catalyst for increased foreign investments, drawing the attention of global investors eager to tap into the nation’s burgeoning market potential.
The Momentum of Change
Thuy Anh Nguyen, a product specialist at Vietnam Enterprise Investments, underscores the significance of this upgrade. She points out that foreign buying is likely to accelerate as investors re-evaluate their options in light of Vietnam’s enhanced status. With the investment trust, Vietnam Enterprise Investments Limited (VEIL), listed on the London Stock Exchange since 1995, currently trading at about a 14% discount, there is considerable room for growth.
Nguyen asserts, “Emerging markets are becoming more investible, and Vietnam is particularly attractive.” The nation’s stock market has already shown remarkable resilience, soaring 30% this year while still being regarded as undervalued compared to its peers.
Attractive Market Valuations
One of the compelling reasons for this optimism is the economic reforms initiated by Vietnam’s new administration, which took charge in August 2024. Nguyen emphasizes how swiftly the government has enacted reforms, indicating a strong commitment to modernizing the economy. This proactive approach has fostered an environment ripe for investment.
“The stock market is 30% up this year, but valuations are still really cheap,” she remarks, highlighting the unique investment opportunities available for those willing to enter the market now.
Insight from Ground-Level Experts
The VEIL investment trust is managed by Dragon Capital, Vietnam’s largest and oldest investment manager, boasting around £5 billion in assets under management (AUM), with £2 billion invested in VEIL. Having a dedicated team on the ground in Vietnam—including three portfolio managers and an 18-person research team—allows them to stay attuned to local market dynamics, a factor Nguyen identifies as a significant competitive advantage.
Navigating Potential Pitfalls
Despite the promising outlook, foreign net selling in the Vietnamese stock market remains a concern. For instance, in April 2025, Vietnam was targeted by Donald Trump’s trade tariffs, initially set at a staggering 46% on all Vietnamese goods. However, following negotiations, this rate was reduced to 20% in August, demonstrating the country’s resilience amid external pressures.
Nguyen points out that the impact of these tariffs has been somewhat mitigated because many companies exporting from Vietnam are not solely Vietnam-based. She states, “Despite all the tariff drama, exports are growing. Initially, there was panic when the 46% tariff was announced, but the market quickly realized that the Vietnamese stock market is not directly exposed to these tariffs.”
Looking Ahead
The outlook for Vietnam in the coming year is notably positive. Nguyen believes that government reforms are in sync with a new paradigm of growth. As more foreign investors recognize the opportunities within Vietnam, the potential for significant economic advancement is palpable.
In summary, Vietnam’s elevation to emerging market status could attract a plethora of new investments. With robust market reforms and an adaptable economy, the nation appears poised for growth that savvy investors are increasingly likely to capitalize on.