Are foreign capital flows gradually returning to Vietnamese stocks?

Foreign investors have remained net sellers of more than VND6.63 trillion ($251.76 million) on Vietnam’s stock market since April 8, though several sessions of net buying have re-emerged, with most of the net selling concentrated in a handful of large-cap stocks such as VIC, VHM and VPL.

April 8 marked a milestone for Vietnam’s stock market after FTSE Russell confirmed the reclassification of Vietnam from frontier to secondary emerging market status, effective from September 21, 2026, as the country "meets all criteria" for the status.

The move has raised expectations of renewed foreign inflows after years of persistent net outflows. Analysts estimate Vietnam equities could attract around $1.5-1.7 billion in passive funds, while active inflows may be five to seven times larger, or roughly $8-11 billion.

Although the upgrade will only take effect from September 2026, foreign trading activity has shown early signs of improvement, with net buying recorded in several recent sessions.

Data show that since April 8, foreign investors have still posted net sales of VND6.63 trillion ($251.76 million) since April 8. However, three out of eight trading sessions saw net buying. Selling pressure was largely driven by block trades in a few stocks, including net sales of nearly VND1.17 trillion in VIC (Vingroup) on April 8, nearly VND3.38 trillion in VHM (Vinhomes) on April 15, and over VND3.28 trillion in VPL (Vinpearl) on April 9.

An early signal of renewed interest is the sharp rise in new foreign investor accounts. According to the Vietnam Securities Depository, foreign investors opened 417 new accounts in March, double the number in February and the highest since June 2025.

In the first quarter, 994 new foreign investor accounts were opened, bringing the total to 52,763 accounts. This marked the highest quarterly increase in four years, since the first quarter of 2022.

Data collected by The Investor show that during the 2021-2022 market boom, when the VN-Index surged from around 660 points to 1,500 points, new foreign account openings also exceeded 1,000 per quarter.

The increase may reflect recent reforms aimed at simplifying procedures and reducing administrative and technical barriers for foreign investors.

Clearer reversal expected in second half

Nguyen Thanh Lam, director of retail research at Maybank Investment Bank (MSVN), said the recent surge in foreign account openings is a notable development. Despite continued net selling in trading terms, nearly 1,000 new trading codes were issued in the first quarter, highlighting strong foreign investor interest in Vietnam’s stock market.

The existence of a clear upgrade roadmap could help trigger new inflows into the market, he said.

Passive funds linked to the reclassification are expected to be disbursed gradually starting in September, while larger active flows will depend on the strategies of global fund managers.

Lam said it remains too early to draw firm conclusions, but the signals justify cautious optimism. Predicting the exact timing of a reversal in foreign flows remains difficult, as it depends on multiple factors.

In the near term, the market will need additional catalysts, including easing geopolitical tensions, particularly in the Middle East; potential interest rate cuts by the Federal Reserve, which would support the USD/VND exchange rate; the formal start of the Vietnamese market status upgrade process in September alongside passive fund inflows; and continued stable and positive domestic economic growth.

As such, a clearer reversal in foreign flows could emerge in late third quarter or early fourth quarter, according to MSVN.

According to KB Research, the market status upgrade process has officially moved from the “watchlist” phase to “technical implementation.” After Vietnam joins the Secondary Emerging market group on September 21, its removal from Frontier indices will occur in a single step, while the inclusion of Vietnamese stocks in the FTSE GEIS and related indices will be phased in over four tranches from September 2026 to September 2027.

The upgrade is expected to trigger large-scale capital reallocation from global index and active funds into Vietnam, with potential inflows estimated at $3-9 billion, equivalent to a 0.3-1.1% weighting in the FTSE Emerging All Cap index.

On the other hand, the market may face outflows of around $0.8-1 billion from dedicated Frontier Markets funds. However, this selling pressure is likely to be modest compared with the expected demand from emerging market funds, supporting asset revaluation and reinforcing confidence in the upgrade timeline.