Don't worry about foreign investors' strong net selling after Vietnam's market status upgrade: experts

The current wave of foreign net selling in the Vietnamese stock market is mainly driven by P-Note (Participatory Note) flows, but the selling pressure from this group has shown signs of easing in recent sessions, says Le Anh Tuan, CEO of Dragon Capital.

A P-note, or Participatory Note, is a financial instrument used by overseas investors to participate in a country's stock market without direct registration with its market regulator.

Vietnam’s stock market wrapped up the October 6-10 trading week on a strong note. The VN-Index surged 6.18% for the week, surpassing its September 2025 peak to close at 1,747.55 points, heading toward the 1,750-1,800-point range.

Meanwhile, the VN30 Index rose 6.51% to 1,980.57 points, also breaking its previous high and approaching the 2,000-point mark.

It was a historic week for the VN-Index, buoyed by FTSE Russell’s decision to upgrade Vietnam's market status from "frontier" to "secondary emerging", along with continued momentum from solid national economic growth.

However, the only downside was that foreign investors extended their net-selling streak to 12 consecutive weeks, with a total net outflow of VND5,046 billion ($191.57 million) on the Ho Chi Minh Stock Exchange (HoSE).

This persistent foreign net selling has raised concerns among investors. Addressing the issue at the “Investor Day: Successful Investing in a New Era” event recently organized by Dragon Capital, CEO Le Anh Tuan explained that foreign capital currently accounts for only 10-15%, the lowest level in the history of Vietnam’s stock market. Therefore, he believes investors should only pay a moderate level of attention to the foreign net selling.

According to Tuan, the ongoing selling pressure mainly stems from P-Notes, but the selling force of this group is tapering off.

“In the short term, when FTSE Russell track index funds are disbursed, an estimated $1-1.5 billion could flow back into Vietnam’s stock market, though this will likely occur over the next year,” he analyzed.

Tuan also cautioned that investors should not expect too much that the market status upgrade will help foreign capital automatically flow into the Vietnamese stock market. The reason is the stocks to be purchased must satisfy factors of valuation and profit growth, along with stable domestic macroeconomic conditions.

From another perspective, Truong Hien Phuong, a senior director at KIS Vietnam Securities, said that Vietnam’s market is still facing selling pressure from funds tracking frontier market indexes, while funds tracking emerging market indexes have not yet started disbursing capital, since Vietnam will only be officially added to FTSE Russell’s Emerging Market Index around March 2026.

This explains why foreign investors have continued to net sell even after the market status upgrade announcement, he added.

Looking ahead, Phuong expects foreign investors' net selling would continue, though at a more moderate pace. Besides the factors above, foreign investors are net selling due to the USD-VND interest rate gap, the lack of new investment products on the market, and foreign ownership limits in Vietnamese stocks.