MSCI keeps Việt Nam off upgrade watch list

MSCI keeps Việt Nam off upgrade watch list

Foreign ownership limits (FOL) remain the most significant obstacle to Việt Nam's market upgrade process.

An investor at a trading office of a securities firm in Hà Nội. — VNA/VNS Photo

Global index provider Morgan Stanley Capital International (MSCI) has once again excluded Việt Nam from its market upgrade watch list, indicating that the country's stock market has yet to satisfy the conditions required for consideration for emerging market status.

MSCI released its 2026 Annual Market Classification Review on Wednesday.

In the six-page report, Việt Nam was not mentioned in any of the key sections, meaning the market remains outside the watch list for potential reclassification.

The continued absence from the watch list suggests that MSCI does not yet consider the country to have met the necessary requirements for an upgrade at the current stage.

In its Global Market Accessibility Review published last week, MSCI maintained its assessments across all 18 market accessibility criteria.

The organisation acknowledged several improvements made by Việt Nam, including the implementation of trading through global brokers, progress in the roadmap for establishing a central counterparty clearing mechanism and efforts to enhance English-language disclosures.

However, eight criteria were still classified as areas requiring further improvement.

Among them, foreign ownership limits (FOL) remain the most significant obstacle to Việt Nam's market upgrade process. 

According to MSCI, the issue currently affects more than 10 per cent of the Vietnamese equity market's capitalisation, resulting in a continued negative assessment for the FOL criterion.

Foreign ownership caps at many listed companies have also shown little improvement. More than 1 per cent of the weighting of the MSCI Vietnam Investable Market Index remains affected by restrictions on foreign investor access.

Regarding clearing and settlement, MSCI noted that although the non-prefunding mechanism has been implemented since late 2024, it considers the measure to be only a transitional solution.

The index provider said it is still waiting for the central counterparty system to be fully deployed, operate stably and demonstrate practical effectiveness before reconsidering its assessment of the Clearing and Settlement criterion.

This year's report also showed that MSCI has started paying greater attention to the free-float ratio of Vietnamese stocks.

Several large-cap companies with relatively low free-float ratios have been placed under observation, as the issue could affect investability for funds, market transparency and the efficiency of price discovery in the stock market. 

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