Why foreign investors continue to net sell Vietnamese stocks despite strong growth

Foreign investors have continued to post heavy net selling in Vietnam’s stock market despite robust economic growth and strong equity gains, highlighting the impact of global factors and shifting capital flows.

In the first three months of 2026, foreign investors recorded net sales of more than VND27.57 trillion ($1.05 billion). The trend follows a record net outflow of nearly VND121 trillion ($4.6 billion) in 2025.

The sustained selling comes even as Vietnam remains a regional bright spot, with economic growth exceeding 8% in 2025 and the benchmark VN-Index surging by a record 40.87%. The country's stock market is likely to be upgraded to secondary emerging status in September this year by FTSE Russell.

According to Bui Hoang Hai, vice chairman of the State Securities Commission, major global asset managers including Vanguard, Morgan Stanley, and JPMorgan have engaged closely with Vietnamese regulators over the past year.

“Many of these institutions have completed the necessary preparations to sign service agreements with local securities firms and custodian banks,” Hai said.

Global pressures and structural shifts

Nguyen Ngoc Anh, CEO of SSI Asset Management Company Limited (SSAM), said the structure of foreign investors in Vietnam is yet to be diversified, with many funds sourced from East Asia.

Divestments by major investors such as SK Group and GIC should not be viewed as a broader net withdrawal trend, she said.

She added that with the VN-Index rising 21% in 2024 and 41% in 2025, investors exiting the market have effectively missed out on gains.

Efforts by the Ministry of Finance and regulators are helping broaden the foreign investor base beyond East Asia to include the United States and other developed markets, with typical deal sizes ranging from hundreds of millions to billions of dollars.

Le Anh Tuan, CEO of Dragon Capital, identified three main drivers behind the net outflows.

First, geopolitical tensions and tariff concerns have raised questions about Vietnam’s short-term competitiveness. Second, global macro conditions - including a strong U.S. dollar and persistently high interest rates in the United States compared with lower rates in Vietnam - have encouraged capital to flow back to the U.S.

Third, foreign capital has shifted toward markets with stronger exposure to artificial intelligence, such as South Korea and Taiwan, while Vietnam’s economy remains more traditional in structure.

In addition, Vietnam’s transition away from frontier market status has also contributed to capital outflows, as some frontier-focused funds rebalance portfolios.

Tuan said tariff concerns may take up to 18 months to materialize, while expectations for a more stable dollar and interest rate environment in 2026 could improve conditions.

He added that Vietnam’s market upgrade could attract between $2 billion and $5 billion in foreign indirect investment (FII) over the next 12 months, with flows in 2026 expected to improve significantly and potentially turn net positive.

Calls for fairer market conditions

Tuan also highlighted the need for more balanced policies for foreign investors, noting that some banks have reduced foreign ownership limits to very low levels.

“This prevents foreign investors from selling to other foreign investors, forcing them to sell to domestic buyers,” he said.

Analysts say improving market accessibility and increasing free float will be key to attracting sustained foreign inflows, particularly as Vietnam seeks further upgrades in global index rankings.