Hey Reader,
Five Southeast Asian countries are making foundational reforms to their capital markets simultaneously in 2026
- most people are missing that this is one joint regional step change
While global investors are absorbed by Middle Eastern headlines, five Southeast Asian countries are quietly reshaping the foundations of how their capital markets work
Most institutional investors still bundle Southeast Asia into one line item somewhere in their EM sleeve, accessed through an index fund and reviewed once a year. Five countries are simultaneously running the most consequential capital market reform programs this region has ever seen. Vietnam, Malaysia, Indonesia, Singapore, and Thailand are each restructuring how their markets operate, who can access them, and how listed companies are governed, with deadlines, enforcement mechanisms, and billions of USD in structural capital flows attached to them. Over the 15 years I’ve been investing on the ground here in Southeast Asia, I have never seen anything like it.
This letter walks through what is happening in each market, what we see on the ground, and what it means for long-term investors.
Vietnam’s seven years of reform, now confirmed
FTSE Russell has officially confirmed Vietnam's upgrade from frontier to secondary emerging market, effective September 21, 2026. Seven years of reform, longer than most institutional fund managers stay in the same job, let alone maintain conviction in the same market thesis, from when Vietnam first indicated its ambition for the FTSE upgrade to the day it was confirmed.
Vietnam's FTSE Russell upgrade roadmap - from Frontier Market to Secondary Emerging Market, effective September 21, 2026. Source: FTSE Russell, State Securities Commission (SSC), HSC Research
The rollout follows a 4-phase schedule running through September 2027:
◼ September 2026 - Phase 1, ~10% inclusion
◼ March 2027 - Phase 2, cumulative ~40%
◼ June 2027 - Phase 3, cumulative ~65%
◼ September 2027 - Phase 4, full 100% inclusion
32 stocks are expected to be added to the FTSE Global All Cap Index, including VCB, SSI, DXG, DGC, FRT, FPT, and SAB across large, mid, and small caps. The final inclusion list is scheduled for announcement on August 21, 2026.
What changed to make this possible? Several structural reforms that had been discussed for years finally went through:
◼ The non-prefunding (NPF) model was introduced, replacing the old pre-fund trade requirement. Under the previous system, foreign investors had to deposit 100% of capital before placing a buy order. This was the single biggest technical barrier to FTSE reclassification, and it has now been removed
◼ A Central Counterparty (CCP) system is planned for implementation by the end of 2026, which will bring settlement infrastructure closer to international standards
◼ In order to facilitate the rapidly increasing trading order flow per second already taking place locally, Vietnam had to change its entire digital trading system infrastructure underlying the Vietnamese stock exchanges (to a Korean KRX system).
◼ The Vietnam Corporate Governance Code, issued February 2026, is now aligned with OECD standards - board composition limits, independent director requirements, and separate reporting obligations are all codified
For investors, the immediate implication is mechanical - passive index funds tracking FTSE emerging market indices will need to buy Vietnamese equities. The larger implication is that Vietnam's market is becoming structurally accessible to a category of institutional capital that was previously locked out by settlement and governance constraints.
We have been investing on the ground in Vietnamese listed companies since before this upgrade was even a possibility. The companies that have come to market since and keep coming to market now are, on average, substantially better governed, more transparent, and more shareholder-friendly than those that listed 10 years ago. What the upgrade confirms is something Endurance Capital built positions around years ago - that Vietnam's reform trajectory was credible and that the patient capital would eventually be joined by a much larger pool of international investors.
The other day, the chairman of a large listed Vietnamese company spontaneously called me up because he wanted to hear Endurance Capital’s view on what his company needed to change in order to make the FTSE index inclusion. Five years ago, that conversation would never have taken place. Today, it's a broad-based trend among listed Vietnamese companies to try to anticipate how they can better fit into an emerging market status stock market and investor base, rather than being a semi-neglected frontier market ticker.
On the flipside, Vietnam’s emerging market status confirmation has barely registered with the global investor community, as most have been absorbed by the Middle Eastern conflict.
Malaysia - a 5 year plan with a >1.5 trillion USD target
Malaysia's reform program is the most explicitly strategic of the five. Prime Minister Anwar Ibrahim launched the Capital Market Masterplan 2026-2030 on March 9, 2026, targeting the expansion of Malaysia's capital market to >1.5 tnUSD by 2030.
Three elements of the plan stand out as genuine needle movers for reaching that target:
◼ The MY Value Up Programme, launched jointly by the Securities Commission and Bursa Malaysia in April 2026, targets the top 88 PLCs (representing ~80% of Bursa Malaysia's total market capitalization, each with a minimum market cap of ~900 mUSD). The program requires companies to articulate mid-to-long-term value creation strategies and improve governance and investor engagement directly inspired by the value-up programs that drove meaningful re-ratings in Japan and Korea
◼ Strengthened corporate governance and regulatory oversight - the Securities Commission is enhancing supervisory frameworks through data-driven regulation and enforcement, building the institutional confidence which in turn attracts long-term international capital
◼ Capital mobilisation through new listings, stronger corporate bond and sukuk (Islamic bond) financing, and attracting >23 bnUSD in foreign-domiciled funds and assets to be managed onshore in Malaysia - broadening the pool of investable capital flowing into Malaysian equities
Malaysia's Capital Market Masterplan 2026-2030. Source: Securities Commission Malaysia
Malaysia's capital market is more mature and more institutionally developed than Vietnam's or Indonesia's. The reform here is about lifting valuations of companies that are already relatively well-run but under-recognized by global capital in the same way Japan's TSE reforms re-rated companies that had been trading below book value for years. The MY Value Up Programme is Malaysia's clearest indication yet that it sees the Japan and Korea playbook as directly applicable to its own listed companies.
Indonesia - external pressure producing governance change on the ground
Aerial View of Jakarta Downtown in the Evening, Indonesia. Source: pexels.com
Indonesia's story is different. Where Vietnam's reforms have been internally driven over many years, Indonesia's governance overhaul was triggered by an external shock.
In January 2026, MSCI threatened to downgrade Indonesia from emerging to frontier market status, citing concerns over the accuracy of free float calculations and instances of price manipulation among Indonesian listed companies. The IDX Composite dropped >7% in a single day following MSCI's announcement, which, as it turned out, accelerated governance reform more effectively than years of polite regulatory consultation.
The response was swift and aggressive:
◼ Removal of both the head of the stock exchange and the head of the financial regulator - IDX President Director Iman Rachman and OJK (Indonesia's financial services authority) Chairman Mahendra Siregar both resigned, along with OJK's chief executive for capital markets supervision. The most sweeping leadership overhaul in Indonesian financial market regulation in decades
◼ IDX raised the minimum free float from >7% to 15%, with phased implementation starting February 2026. ~270 of ~900 listed companies must comply or face delisting, roughly 11 bnUSD in new shares needing to reach public shareholders
◼ IDX is pursuing demutualization to separate exchange ownership from member interests, a structural change that reduces conflicts of interest in market governance
◼ OJK is pushing for an early MSCI review by April 2026 to demonstrate progress before the next scheduled assessment
MSCI used the threat of reclassification (essentially the threat of capital withdrawal) to force governance improvements that domestic regulators had not prioritized on their own. Indonesia moved faster on governance reform in the two months after the MSCI freeze than in the previous 5 years combined. The long-term positive impacts of something like that for local capital markets are worth contemplating for a minute.
This is actually the core logic of collaborative activism but applied on a national level. An external party with credibility and influence leverage identifies a governance shortcoming, communicates it clearly, and ties consequences to inaction. When the cost of poor governance becomes concrete and measurable (in this case, billions in potential passive outflows from an index downgrade), reform happens. The same core mechanism as how we operate as active owners at Endurance Capital.
The early signs are positive. The speed and scope of Indonesia's response, combined with the demutualization initiative and the high-profile firings, suggest this is more than a cosmetic exercise. On the ground, the change is already visible. We have seen Indonesian controlling shareholders respond to the free float requirement in two ways - genuine distribution to independent institutional investors and paper compliance through nominee structures that technically meet the threshold without changing the ownership reality. The early read on the current wave leans more toward genuine distribution, partly because the IDX demutualization removes the exchange's historical incentive to look the other way. This, as always, requires watching at the company level, not just the regulatory level.
Indonesia has ~280 million people, a rising middle class, and a long range of listed companies with genuinely enduring economics still trading at discounts that do not reflect their underlying quality. The governance overhang was the primary reason many serious long-term investors stayed underweight. We are currently at the point of maximum reform but also maximum uncertainty, as MSCI has not concluded its review. That being said, for long term patient capital, the picture is much more clear: we are at peak discount for quality companies in one of the world's largest and fastest growing consumer markets - it's a rare window of opportunity to enter into undervalued, high-quality Indonesian companies that most investors are currently throwing out the baby with the bathwater.
Singapore - 5 bnUSD of government capital backing the equity value-up
Singapore is approaching market reform differently from everyone else in the broader Southeast Asian region by deploying ~5 bnUSD of direct government capital into its own equity market.
Singapore's ~5 bnUSD Equity Market Development Programme (EQDP) overview. Source: Monetary Authority of Singapore
The Equity Market Development Programme (EQDP) now totals ~5 bnUSD after a >1 bnUSD top-up in Budget 2026. ~3 bnUSD has already been allocated across nine asset managers, including BlackRock, JP Morgan, Manulife, and Fullerton, with a specific mandate to invest in Singapore-listed equities, with emphasis on small- and mid-cap stocks outside the STI.
On top of the capital deployment, MAS and SGX launched a ~23 mUSD Value Unlock Programme providing grants to listed companies for corporate strategy, investor relations, and governance improvement. The Grant for Equity Market Singapore (GEMS) Listing Grant co-funds 70% of eligible listing expenses for new SGX Mainboard IPOs, a direct subsidy to bring mid-cap companies onto the exchange.
Singapore also serves as the regional headquarter and listing domicile for many Southeast Asian companies with operations across the region. The SGX is actively attracting cross-border listings, with healthcare and technology companies from across the broader Southeast Asian region pursuing SGX listings supported by very meaningful government incentives for listed midcaps. SGX is simultaneously building the derivatives and hedging infrastructure (including USD-settled government bond futures for India, Indonesia, Malaysia, the Philippines, and Thailand) that institutional investors need before they can deploy meaningful capital into the region. Institutional capital follows infrastructure, and Singapore is putting both in place simultaneously.
A government deploying ~5 bnUSD into its own equity market, subsidizing new listings, building hedging infrastructure, and launching grants for governance improvement leave very little room for misinterpretation. Singapore is now providing the institutional foundation to support exactly the kind of company-level engagement we practice at Endurance Capital.
Thailand - the value-up way
Stunning Bangkok Cityscape with Modern Skyscrapers, Bangkok, Thailand. Source: pexels.com
Thailand's approach is the most company-specific of the five. Rather than targeting index classifications or transaction costs, Thailand's SEC and Stock Exchange of Thailand jointly launched a value-up strategy in June 2025, focused directly on the governance and valuation quality of individual listed companies.
The program runs on two tracks. The SEC's Corporate Value-Up Program sets eligibility criteria - demonstrated governance excellence assessed by an independent agency, a two-year financial improvement strategy, and a transparent investor communications plan. Companies that qualify gain access to the Thai ESG Fund and Thai ESGX Fund, with attached tax incentives. The SET's JUMP+ Program is the pathway for participating companies to build three-year roadmaps (2026-2028) covering business execution, investor relations governance, and climate action, with consulting and roadshow support from the SET. Around 100 companies are expected to enroll in year one.
Currently, only two Thai-listed companies meet the full corporate value-up criteria. Two out of several hundred is a measure of how far the program has to go and how early we are.
Japan ran a comparable initiative, requiring listed companies to address sub-1x price-to-book ratios. It drove a meaningful re-rating of the Tokyo Stock Exchange through 2023 and 2024. Thailand is applying an identical core logic to its program - define clear criteria, attach capital incentives, and let institutional capital respond. For active owners, Thailand's reform provides something rare - a public, regulator-endorsed checklist of what governance improvement should look like.
I’m quite excited to see this one play out in practice.
What we see on the ground
Five out of six major Southeast Asian economies are implementing foundational reform programs for corporate governance and capital markets simultaneously. As the program is still in the early innings of implementation, the positive changes have not yet had their full impact on the listed companies of the region => i.e. we are still pre value appreciation. From my perspective, this puts us in an unprecedented phase of the public markets of Southeast Asia.
Geopolitical shocks are useful stress tests for reform credibility. They give regulators political cover to pause, delay, or quietly shelve programs that were never structurally serious to begin with. Five reform programs ran through the Iran War's disruption to regional investor sentiment. None paused. None reversed. Every regulator in the broader Southeast Asian region had a credible excuse to slow down. None of them took it. Five programs that continued through genuine disruption tell you something about the institutional seriousness behind them. Reform that holds through adversity is a different category from reform that exists only in fair weather.
The instinct for most global investors when looking at Southeast Asia is to treat it as a single allocation decision - "Should we have emerging market exposure? How much? Through which ETF?" - a framing that misses what is actually happening on the ground.
Five countries are making fundamentally different choices about how to develop their capital markets. Vietnam is completing a multi-year upgrade to attract passive index capital. Malaysia is running a Japan/Korea-inspired value-up across its top 88 listed companies. Indonesia is restructuring governance under external pressure. Singapore is deploying ~5 bnUSD of government capital directly into its equity market, also incentivizing IPOs and improved investor relations tools. Thailand is lifting listed company governance standards one company at a time.
Each of these creates a different type of opportunity, with different timelines, different risk profiles, and different entry points. Treating them as interchangeable, bundling five structurally different reform stories into a single frontier/emerging allocation call is what kept serious investors underweight Southeast Asia for the past 10-15 years, a theme we have written about at length in previous letters.
On our end, we are investing in a concentrated portfolio of listed Southeast Asian companies with enduring economics that are misunderstood, undervalued, and where substantial value can be created through collaborative activism. For us, governance and capital markets reform programs with teeth are like very large government-backed early Christmas gifts. These are the very levers we will be pulling in the future to drive through value-accretive change in the listed companies we invest in.
We have been building positions in this region over many years, through periods where most of the global investor community was looking elsewhere but actively questioning why anyone would bother. The capital market reforms are happening across Vietnam, Indonesia, Singapore, and Thailand right now and are expanding the universe of companies that meet our influence, governance, and liquidity criteria. Better governance, market infrastructure, and minority shareholder protections all improve the practicalities of engaging as an active, long-term owner.
We have always been willing to invest where others see complexity, provided we can engage directly and the governance trajectory is positive. Across all five, the direction of travel has never been clearer. We have allocated accordingly.
Christopher B. Beselin
Investing, compounding & exiting
Christopher B. Beselin - is the Chief Investment Officer of Endurance Capital. The views & opinions expressed in this newsletter is for informational and educational purposes only and should not be considered investment advice.
PS. If you are a qualified professional investor and want to think through how to structure long-term Southeast Asia exposure with an active ownership lens - feel free to schedule a 1-to-1 emerging market strategy call with Christopher B. Beselin via this link. DS.