Why are foreign investors selling even strong growth companies like Duc Giang Chemicals, PNJ?

The recent developments surrounding Duc Giang Chemicals (HoSE: DGC) and Phu Nhuan Jewelry (HoSE: PNJ) have drawn attention to sustained foreign selling pressure in Vietnam's stock market. However, the simultaneous reduction of foreign holdings in companies such as FPT Corp., Vinamilk and Vinhomes suggests the trend reflects a broader portfolio rebalancing rather than a response solely to company-specific risks.

For years, shares of Duc Giang Chemicals JSC and Phu Nhuan Jewelry JSC were among the most favored holdings of foreign institutional investors. PNJ consistently traded close to its foreign ownership limit, while DGC was widely regarded by institutional investors for its large market capitalization, strong profitability and robust growth prospects.

Against that backdrop, foreign investors' reaction following recent developments at the two companies has attracted considerable market attention.

After authorities announced in mid-March that Duc Giang Chemicals chairman Dao Huu Huyen, his son and several company executives were subject to legal proceedings, foreign investors sold a net 8 million DGC shares between March 17 and March 31.

A similar pattern emerged at PNJ. Following news that Dang Ngoc Thao, former director of P Lab, a PNJ subsidiary, had been subject to legal proceedings, foreign investors sold a net 6.9 million PNJ shares between July 3 and July 13, despite the company's reassurance that its business operations remained unaffected.

Viewed in isolation, the two cases could suggest that foreign investors were merely responding to company-specific events. However, do these incidents fully explain the wave of foreign net selling seen across Vietnam's equity market in 2026?

Foreign selling extends well beyond DGC and PNJ

In reality, foreign investors have already been net sellers since the beginning of 2026, well before DGC and PNJ became embroiled in issues involving their management. In other words, the developments at DGC and PNJ did not trigger the broader sell-off but instead made an existing trend more visible.

While DGC and PNJ represent companies facing company-specific events, FPT Corp., Vinhomes and Vinamilk present a markedly different picture.

Between mid-February and mid-July 2026, FPT reported no major developments affecting either its business operations or management. The technology group maintained its industry-leading position, continued to deliver earnings growth, and remained one of the preferred holdings of foreign funds.

Nevertheless, foreign ownership data point to the opposite trend.

Between February 12 and July 13, the number of FPT shares available for foreign investors to purchase increased from about 170 million to more than 363 million. As the foreign ownership cap remained unchanged during the period, the increase in available room indicates a corresponding decline in foreign holdings. Based on that calculation, foreign investors reduced their position in FPT by roughly 193 million shares over five months.

Vietnam Dairy Products JSC (Vinamilk, HoSE: VNM) showed a similar pattern.

Foreign ownership data indicate that, over the same period, the number of VNM shares available to foreign investors increased by about 35 million, implying a comparable reduction in foreign ownership of Vietnam's largest dairy producer.

While the trading performance of FPT and Vinamilk could partly explain the portfolio adjustments, as their share price performance was less favorable during the period, the case of Vinhomes presents a different picture.

Despite rising roughly 40% to 50% since the beginning of the year, Vinhomes shares were also subject to persistent foreign selling.

During the same period, the number of VHM shares available to foreign investors increased by around 25 million, reflecting a corresponding decline in foreign ownership. Trading data also showed that VHM consistently ranked among the market's most heavily sold stocks by foreign investors.

Notably, all three companies experienced foreign selling despite the absence of major business or management-related events comparable to those affecting DGC or PNJ.

Even so, foreign investors continued to reduce their holdings.

The pattern suggests that the events at DGC and PNJ alone cannot fully explain the sustained foreign net selling seen in Vietnam's stock market in 2026.

Foreign investors are not leaving Vietnam, but the reallocation picture remains incomplete

Foreign ownership data, however, reveal one notable exception.

Between mid-February and mid-July 2026, the number of Vingroup (HoSE: VIC) shares available for foreign investors to purchase fell by approximately 31.5 million, while the foreign ownership cap remained unchanged. Using the same methodology, this indicates that foreign holdings in the stock increased by a corresponding amount.

The trend stands in contrast to the broader market.

Monthly trading data, however, also show that foreign investors were both aggressive buyers and sellers of VIC during the same period. In June alone, foreign investors purchased roughly VND15.9 trillion ($607 million) worth of VIC shares while selling about VND15.4 trillion.

As a result, the narrowing of foreign ownership room alone is insufficient to conclude that investors are building long-term positions. More detailed trading data are needed to determine whether the increase reflects strategic accumulation or other forms of portfolio activity.

The data suggest that the broader picture is not one of a straightforward capital exodus from Vietnam, but rather one of capital being reallocated across companies.

At the beginning of 2026, expectations of Vietnam's promotion to FTSE Russell's Secondary Emerging Market category strengthened hopes that foreign capital would return to the country's equity market.

Speaking to local media in early January, Dang Nguyet Minh, head of research at Dragon Capital, said the market upgrade could become an important catalyst for attracting foreign portfolio investment in the coming years.

Actual market developments, however, have proved more complex.

In an analysis published in early March, foreign media cited international institutional investors as saying that although Vietnam continues to post strong economic growth and its prospects for a market upgrade have improved, foreign investors remain cautious because of factors including tariff risks, foreign ownership restrictions and the heavy concentration of several large-cap stocks in benchmark indices.

Those assessments suggest that foreign net selling has been shaped by a broader set of considerations than company-specific events alone.

A similar view was expressed by Tran Thang Long, deputy chief executive of BIDV Securities (BSC), during a VTV8 financial program in May 2026. Although FTSE Russell had confirmed Vietnam's market upgrade roadmap in its March review, foreign investors extended their net selling streak to five consecutive weeks, with total net sales exceeding VND20.9 trillion ($796 million).

According to Long, the trend reflected a combination of global risk-off sentiment, portfolio rebalancing by investment funds and the allocation of global capital to opportunities in other markets.

Taken together, the evidence suggests that DGC and PNJ may simply have made foreign investors' behavior more visible.

Expanding the analysis to include FPT, Vinhomes, Vinamilk and even Vingroup, nevertheless, indicates that foreign investment decisions are not driven solely by company-specific developments.

At the same time, the available data are still insufficient to conclude that foreign investors have adopted an entirely new framework for allocating capital in Vietnam. What is observable is that portfolio reallocation is taking place unevenly across companies and is being shaped by multiple factors, ranging from company-specific risks to broader global capital flows.

As Vietnam is set to join FTSE Russell's Secondary Emerging Market category this September, the key question is which companies will meet the criteria to attract foreign investors when those capital flows eventually return.