FDI listings a missing piece in Vietnam's stock market development

As Vietnam's stock market moves closer to its long-awaited upgrade to secondary emerging market status and seeks to attract higher-quality capital, allowing more foreign-invested companies to list on domestic exchanges could broaden the pool of investable assets and support the next phase of capital market development.

Despite more than 25 years of growth, the country's stock market has seen only limited participation from foreign-invested companies, one of the country's most important economic drivers.

The market now hosts around 1,600 public companies listed or registered for trading, but according to the State Securities Commission (SSC), only 11 FDI firms converted into joint-stock companies and listed between 2003 and 2017. Today, roughly the same number remain listed or registered for trading on Vietnam's exchanges.

Companies such as Everpia, Siam Brothers Vietnam, Taicera and Taya Vietnam have relatively small market capitalizations, leaving the FDI sector significantly underrepresented. The SSC estimates that FDI stocks account for only about 0.17% of the market's total value.

The disparity is striking given that the FDI sector contributes around 20% of Vietnam's GDP and more than 70% of exports while hosting numerous multinational corporations in electronics, technology, logistics and manufacturing. Domestic investors, however, have little opportunity to own shares in many of these leading businesses operating in the country.

The absence of large FDI listings has also limited the diversity of Vietnam's equity market, leaving high-growth sectors such as electronics, semiconductors, advanced technology and logistics largely unrepresented.

Analysts attribute the limited participation of FDI firms to longstanding barriers including corporate restructuring requirements, foreign ownership regulations, accounting standards, governance requirements and initial public offering procedures.

In addition, multinational corporations have traditionally relied on funding from parent companies or international financial markets rather than raising capital in host countries. Until recently, Vietnam's stock market was also considered too small to attract companies with multi-billion-dollar valuations.

Market conditions have since changed substantially. Vietnam's stock market has expanded rapidly, with securities accounts exceeding 13 million, while prospects for an upgrade to emerging market status have improved, creating more favourable conditions for FDI listings.

Broadening market depth

Vo Diep Thanh Thoai, head of retail client services at DNSE Securities, said attracting large foreign-invested companies to list would provide multiple benefits for Vietnam's equity market.

Beyond increasing market capitalization, FDI firms could diversify sector representation and raise governance standards, he said. Companies operating under international practices could encourage greater transparency, stronger corporate governance and improved operational standards across the market.

Their presence would also make Vietnam's stock market more reflective of the broader economy rather than remaining concentrated in traditional sectors such as banking, real estate and construction materials.

For investors, broader participation by FDI companies would create opportunities to gain exposure to fast-growing industries including electronics, high technology and logistics, many of which currently have little representation on domestic exchanges despite playing an increasingly important role in Vietnam's economy.

Nguyen Hang Nga, CEO of Vietcombank Fund Management (VCBF), said foreign institutional investors typically place strong emphasis on growth quality, corporate strategy, governance standards, market capitalization, free-float ratios, foreign ownership limits, transparency and environmental, social and governance (ESG) practices.

As a result, Vietnam needs not only to secure a market status upgrade but also to improve both the quantity and quality of listed companies if it hopes to attract long-term institutional capital and diversify the market.

Those factors are also closely monitored by index providers such as FTSE Russell and MSCI when assessing market quality and depth.

Policy momentum builds

Momentum for greater FDI participation strengthened this month after policymakers signalled stronger support for integrating foreign-invested companies into Vietnam's capital markets.

On June 12, the Politburo issued Resolution No. 10 on developing the foreign-invested sector during the next phase of economic development, shifting policy priorities from attracting FDI based on volume to focusing on quality, efficiency, technology transfer, added value, and the ability to link with domestic enterprises.

For the 2026-2030 period, Vietnam aims to attract between $200 billion and $300 billion in registered FDI, with around 75% expected to come from developed economies. The country also seeks to attract additional Fortune 500 companies and at least three of the world's leading technology firms to establish headquarters, offices or research and development centers in Vietnam.

The resolution also calls for further development of capital markets, accelerated efforts to upgrade Vietnam's stock market and the establishment of international financial centers, measures intended to facilitate greater foreign portfolio investment.

Alongside those policy initiatives, the SSC has stepped up efforts to expand opportunities for FDI companies to list domestically.

SSC Chairwoman Vu Thi Chan Phuong has previously identified increasing the supply of high-quality listed companies as one of the regulator's strategic priorities.

Experts say the key to turning policy ambitions into reality lies in creating a stable, transparent and predictable legal framework. Rather than short-term incentives, multinational corporations tend to prioritize regulatory consistency and investor protection when considering listing decisions.

They also argue that streamlining IPO procedures and linking them more closely with listing requirements would shorten access to capital markets, reduce costs and improve the appeal of local listings.

According to Vo Diep Thanh Thoai, accelerating adoption of International Financial Reporting Standards (IFRS), simplifying administrative procedures, and standardizing regulations governing FDI enterprises would likely have a greater impact than conventional investment incentives.

At the same time, Vietnam should continue developing its ecosystem of institutional investors, pension funds, insurance companies and other long-term sources of capital. A deeper market with the capacity to absorb large transactions would make domestic listings increasingly attractive for foreign-invested enterprises.

As Vietnam approaches its goal of securing an emerging market status upgrade, attracting more high-quality FDI companies to local exchanges could not only expand investment opportunities but also help modernize the country's capital market and bring it closer to international standards.