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Vietnam “Tiger Cub” Well Placed To Become "Asian Tiger" After Upgrade 

Tom Burroughes

9 October 2025

The Vietnamese economy has been promoted to the “emerging market” from “frontier” status by index provider FTSE Russell, opening the way for more investors to hold companies operating in the Southeast Asian nation.

Formal inclusion of the country in the FTSE Russell emerging market category took effect on 21 September, subject to certain conditions being met.

“This milestone is the result of Vietnam’s decisive and coordinated reforms, elevating the country’s standing on the global investment map,” Minh Dang, Dragon Capital’s head of research, said in a note yesterday. Dragon Capital has $5 billion in AuM.

The country, still nominally a Communist state but having embraced forms of capitalism in the past few decades, boasts a relatively strong gross domestic product growth rate. GDP rose 7.85 per cent in the first nine months of this year, with a 8.23 per cent rise in the third quarter.

– which this news service has interviewed before, see here and here – said it predicts corporate earnings growth in Vietnam of 21 per cent in 2025 and a further 17 per cent in 2026. Since the start of this year, the Vietnam Index has gained 30.3 per cent in dollar terms; average daily trading value has held consistently above $2 billion.

Minh Dang said Vietnamese regulatory bodies have “worked intensively” to deliver institutional and infrastructure reforms, resulting in two decrees, four circulars, and one amended law to strengthen the legal framework, align with international standards, and prepare for this reclassification.

“While FTSE’s decision is a well-deserved recognition of these efforts, we believe what is even more significant is that Vietnam does not view this as the final destination. For the first time, the government has laid out a comprehensive long-term strategy with specific actions to target FTSE Advanced EM and MSCI EM status by 2030,” Minh Dang continued. Government priorities include reviewing foreign ownership rules to raise limits and remove unnecessary sectoral restrictions; upgrading clearing and settlement infrastructure to support non-pre-funded transactions and introduce a Central Counterparty (CCP) model; gradually allowing securities lending, controlled short selling, and same-day trading; and developing the foreign exchange market with hedging instruments to support foreign portfolio investors.

Prospects
Although Vietnam accounts for 32 per cent of the FTSE Frontier Index, the index only has a total market capitalisation of $156 billion. Even with a much-reduced weighting – estimated at 0.3 per cent to 0.5 per cent – in the FTSE Emerging Index, an upgrade to a larger index would be positive in giving Vietnam access to a much larger pool of capital as the Emerging Index with its total market cap of $9.4 trillion is some 60x larger,” Julius Baer said.

“This should lead to incremental inflows estimated at between $1.5 billion to $6 billion based on the street’s initial projections. Greater institutional participation should also deepen liquidity for the market.

“As the local Vietnamese mainboard has already surged 30 per cent year-to-date in anticipation of the upgrade, we would not be chasing the rally in the short term. Indeed, the experience of Iceland, Saudi Arabia, Kuwait and Qatar when they were upgraded to FTSE Emerging Market status suggests that post-announcement price action has been mixed with Saudi Arabia outperforming but Qatar and Iceland lagging,” Julius Baer said.

“Among the five ‘tiger cub’ economies in Southeast Asia, Vietnam has the best prospects of becoming an ‘Asian tiger’, given its commitment to reform and emphasis on moving up the value chain to grow expertise in high-tech sectors,” it added.