Vietnam Targets MSCI Watch List Inclusion Amid Strong Capital Market Growth

HANOI – Fresh from securing an upgrade from index provider FTSE Russell, Vietnam is intensifying its efforts to gain inclusion on MSCI’s watch list, a critical step toward attracting significantly larger foreign investment flows into its rapidly developing capital markets.

The push comes amid robust activity in the country's financial markets. In the first four months of 2026, total capital raised through the stock market reached nearly $3.4 billion, a 52 per cent increase from the same period last year, said State Securities Commission (SSC) chairwoman Vu Thi Chan Phuong. Speaking at a May 26 working session with Minister of Finance Ngo Van Tuan, Phuong added that corporate bond issuance rose 42 per cent year-on-year to almost $2.42 billion.

“Based on reviews of shareholder meeting resolutions from listed companies, approximately $16.82 billion is expected to be raised through the stock market in the rest of 2026,” Phuong said. “A number of major businesses are preparing capital increase plans and initial public offerings accompanied by listings this year.”

FTSE Upgrade Paves the Way

Vietnam’s market reclassification efforts have already borne fruit. FTSE Russell has confirmed it will upgrade the country’s stock market to emerging market status, effective from September. The move is set to add around 30 Vietnamese stocks to its benchmark indices.

This has piqued the interest of global asset managers. According to the SSC chairwoman, international institutions have begun opening accounts to deploy capital, including Vanguard Group. The U.S.-based investment giant is estimated to invest at least $1.5 billion into the market.

Focus Shifts to MSCI Review

With the FTSE upgrade secured, investors are now awaiting a new catalyst from a potential reclassification by MSCI. Many securities executives and analysts had previously projected that Vietnam had a strong chance of being added to MSCI’s upgrade watch list as early as June of this year.

All eyes are on the index provider's upcoming announcements. MSCI is scheduled to publish its 2026 Global Market Accessibility Review on June 19 and its 2026 Annual Market Classification Review on June 24.

Market reclassification would represent an important milestone, particularly for attracting foreign capital, said Truong Quang Binh, director of Retail Client Research at Yuanta Securities Vietnam. He noted a recent trend of net selling by overseas investors. “Foreign investors are still net sellers. In addition to international market volatility, Vietnam’s stock market is entering a pre-upgrade phase, prompting some frontier-market funds to gradually withdraw capital,” Binh explained. “However, positive impacts are expected to return.”

Key Reforms and Long-Term Outlook

Vietnam has undertaken significant reforms to meet international standards. Recent progress includes the launch of the KRX trading system and the implementation of mechanisms to exempt foreign investors from pre-funding requirements. To enhance transparency, the Ho Chi Minh City Stock Exchange has also encouraged listed companies to disclose information in English starting in 2026.

A key future initiative is the planned introduction of a Central Counterparty (CCP) clearing model in 2027, which is expected to further attract foreign capital and help satisfy MSCI’s requirements.

From a longer-term perspective, an MSCI upgrade holds greater weight than the FTSE promotion, Binh explained, given that the number of investment funds using MSCI benchmarks substantially exceeds those tracking FTSE indices. This could lead to considerably more abundant capital inflows.

Efficient capital and debt markets are crucial for the country's economic ambitions. Binh forecasts that Vietnam’s goal of achieving 10 per cent GDP growth by 2030 is attainable if both markets operate effectively. Foreign capital is a key driver, with overseas investors currently holding 14.25 per cent of total market capitalisation.

As of May 2026, Vietnam had fulfilled 10 of 18 MSCI criteria and was close to meeting 17 of 18 qualitative requirements for watch-list inclusion. Once added to the watch list, a market typically remains there for approximately two to three years before a final upgrade decision.

Binh stressed that Vietnam’s sovereign credit rating remains another critical factor. Further upgrades could move the country into the 'investment-grade' category, "opening the door to potentially massive capital inflows into the country’s capital markets."