Frontier Horizons: Navigating the MSCI 2025 Shifts in Emerging Market Access

The MSCI 2025 Global Market Accessibility Review has reshaped the landscape of emerging and frontier markets, offering investors a critical roadmap for capitalizing on improved accessibility and liquidity. With Vietnam and Morocco now formally joining the MSCI Frontier Markets Index—effective May 30, 2025—the stage is set for a reevaluation of portfolios ahead of the June 24 Annual Market Classification Review. These moves underscore a broader trend: markets once deemed too nascent are now meeting the rigorous criteria for inclusion, opening doors for strategic allocations. For investors, the message is clear: act decisively before the next round of classifications reshapes capital flows.

The Case for Vietnam and Morocco: From Frontier to Frontline

Vietnam's inclusion in the MSCI Frontier Markets Index is no accident. The country's rapid economic expansion—driven by tech-driven manufacturing, a young workforce, and export-oriented policies—has been matched by structural reforms. Companies like Tien Phong Commercial Bank, one of the largest additions to the index, exemplify the deepening liquidity of Vietnam's financial markets. Meanwhile, Morocco's dual listings of Credit Du Maroc and Sonasid reflect its progress in diversifying its economy beyond traditional sectors like agriculture and tourism. Both nations have addressed key barriers: Vietnam has streamlined foreign ownership rules, while Morocco has enhanced capital flow efficiency, aligning with MSCI's five pillars of accessibility—openness, capital flow, operational efficiency, instrument availability, and institutional stability.

Data-Driven Momentum: ETFs Signal the Shift

The performance of region-specific ETFs offers a tangible gauge of investor sentiment. Vietnam's VNM ETF, which tracks its equity market, has surged 22% year-to-date, outpacing broader emerging markets. Similarly, Morocco's MRO ETF, though smaller, has seen liquidity double over the past year, reflecting growing institutional interest. These trends are not accidental—they mirror MSCI's findings that frontier markets are advancing in market infrastructure, a key criterion for reclassification.

The June 24 Crossroads: Why Timing Matters

The June 24 Annual Market Classification Review will amplify this momentum. While Vietnam and Morocco's frontier status is now confirmed, the spotlight turns to Bulgaria, which is under review to transition from a Standalone Market to Frontier. Such reclassifications trigger automatic allocations from passive funds, creating a “halo effect” for active investors who position early. Delays in portfolio rebalancing could mean missing the influx of capital that follows formal index inclusion—a lesson learned from the 2020 Turkish equity surge.

Risks and Rewards: Navigating the Nuances

No opportunity is without risk. Vietnam's reliance on global manufacturing demand and Morocco's exposure to commodity price swings could test resilience. Yet, both markets offer compelling risk-adjusted returns: Vietnam's GDP growth is projected at 6.5% in 2025, while Morocco's FDI inflows hit a record $7.2 billion in 2024. Investors should pair broad ETF exposure with sectoral picks—Vietnam's tech and renewable energy sectors, Morocco's logistics and tourism infrastructure—while hedging against external shocks.

A Call to Action: Rebalance with Purpose

The window to adjust portfolios before June 24 is narrowing. For investors, this is not merely a tactical move but a strategic reallocation toward markets that have demonstrated sustainable improvements in accessibility. By overweighting Vietnam and Morocco now, investors can capture the inflows that follow formal index inclusion while positioning for potential upgrades in other regions, like Bulgaria.

In a world where liquidity and accessibility define market inclusion, the message is straightforward: follow the data, act before the clock runs out, and let the frontier lead the way.

This article is for informational purposes only. Past performance does not guarantee future results. Investors should conduct their own due diligence and consider their risk tolerance before making decisions.