Vietnam not in MSCI upgrade watchlist despite capital market progress

Vietnam not in MSCI upgrade watchlist despite capital market progress

Despite continued progress in capital market reforms and efforts to improve market accessibility, Vietnam was not included in MSCI’s latest upgrade watchlist released in its 2026 Market Classification Review on June 24.

The latest announcement from Morgan Stanley Capital International (MSCI) focused on Bulgaria, Greece, Indonesia, Turkey, Bangladesh, and South Korea, leaving Vietnam absent.

Despite missing the recent upgrade, Vietnam has introduced several sweeping market reforms acknowledged by MSCI in its June 19 Global Market Accessibility Review.

Key updates include the new Global Broker model, which eliminates the domestic trading account requirement for foreign investors, and the official establishment of a Central Counterparty Clearing (CCP) mechanism slated for early 2027.

Additionally, a phased mandate by the Ministry of Finance requires all listed companies to make a transition to English-language disclosures between 2025 and 2028.

The MSCI was equally clear about what still stands in the way. Foreign ownership limits in conditional business sectors range from zero per cent to 75 per cent, affecting more than 10 per cent of Vietnam’s total equity market capitalisation.

The foreign room issue also persists, with more than 1 per cent of the MSCI Vietnam Investable Market Index still constrained by fully utilised ownership caps at major listed firms.

On the foreign exchange front, Vietnam does not yet have an offshore currency market, and onshore transactions remain tied to underlying securities deals, limiting flexibility relative to peer Emerging Markets.

Raman Aylur Subramanian, head of Market Classification and Taxonomies at MSCI, noted in the classification review, “Index inclusion and market classification are not static judgments. They must be continuously assessed against market changes and the experience of international institutional investors.”

For Vietnam, the next opportunity to make the watchlist will come at MSCI’s 2027 Annual Market Classification Review, with the full deployment and demonstrated stability of the CCP model likely to be the most closely watched milestone in the interim.

VIR