Vietnam could gain MSCI upgrade by 2028: Dragon Capital CEO

Vietnam could be upgraded to MSCI Emerging Markets status as early as 2028 if key market reforms are completed, including the rollout of a central counterparty (CCP) clearing system and wider foreign ownership limits, said Le Anh Tuan, CEO of Dragon Capital VietFund Management JSC (DCVFM).

Speaking at Dragon Capital’s recent Investor Day event, Tuan said Vietnam’s long-term outlook remains underpinned by three major pillars: a more decisive and consistent political system in pushing reforms; the VNeID digital identity platform, which he said could fundamentally reshape how the economy operates; and the country’s ambition to become a regional powerhouse by 2030.

Looking back at 2025, Tuan said Vietnam’s economy delivered a strong performance, with GDP growth of about 8%, a budget surplus of nearly $10 billion, and inflation kept under control at around 3.5%. Retail services and manufacturing both expanded by 9.2%, while disbursed FDI eached $27.6 billion.

“Real-time indicators show an economic recovery,” Tuan said, citing rising container throughput at the Cai Mep-Thi Vai port complex (in Ho Chi Minh City), strong growth in international and domestic tourism, surging QR-code payment transactions, the highest consumer confidence in Southeast Asia, and a sharp increase in advertising spending.

One area of concern in 2025, however, was rising interest rates, which he noted had climbed close to levels seen in 2020-2021. Tuan attributed this to a prolonged slowdown in money circulation over the past four to five years, with capital locked in less liquid areas such as real estate, forcing banks to raise deposit rates or rely more on the interbank market to support credit growth.

He also pointed to a divergence in the yield curve, with short-term interbank rates remaining low while long-term rates moved higher, suggesting the economy is increasingly borrowing at longer maturities.

To address this, Tuan said the State Bank of Vietnam may need to inject longer-term liquidity rather than relying mainly on overnight or one-week operations. “If liquidity is provided at tenors of 180-270 days, long-term rates would have room to ease,” he said, forecasting that interest rates could peak in the first quarter of 2026 before gradually declining.

On the currency, Tuan said the outlook had improved after a period of volatility linked to trade and tariff concerns. Expectations that the U.S. Federal Reserve could cut interest rates more than twice in 2026 would help narrow interest rate differentials and support the Vietnamese dong, he added.

Overall, the Dragon Capital CEO expects Vietnam’s economy to grow by more than 9% in 2026, with inflation below 4%, money supply growth of about 12.5-13%, exchange rate movements contained within 1-2%, and interest rates stabilizing in early 2026 before easing modestly.

Stock market outlook and status upgrades

Turning to financial markets, Tuan said 2025 had been a difficult year for investors, with capital flows highly fragmented and only about 17% of listed stocks outperforming the VN-Index – the lowest proportion on record.

Dragon Capital’s investment thesis for 2026 will focus on consumption and infrastructure, supported by private-sector reforms, state-owned enterprise reforms, a more enabling legal framework, technological adoption, and a wave of initial public offerings.

Corporate earnings are expected to grow by around 19% in 2026, bringing market valuations back to average levels and creating an attractive environment for long-term accumulation, he said.

Tuan also forecast a faster and stronger IPO cycle than many expect, with high-quality companies coming to market and adding an estimated $28 billion in market capitalization. He said Vietnam’s stock market capitalization could double by 2030.

On market classification, Tuan said Vietnam is likely to be upgraded by FTSE Russell in September 2026 and could be placed on MSCI’s Emerging Markets watch list as early as 2026. With a functioning CCP system and looser foreign ownership limits, Vietnam could secure a full MSCI Emerging Markets upgrade by 2028.

“That would be a comprehensive upgrade, opening the door for massive foreign capital inflows into Vietnam’s capital markets,” he said.

While short-term market volatility is inevitable, Tuan said the broader outlook for Vietnam’s economy and stock market over the next three to five years remains highly positive, urging investors to focus on long-term structural changes to capture emerging opportunities.