Wed, May 20, 2026, 11:24:00
Illustration courtesy of the government's news portal.Net outflows have reached nearly VND20.89 trillion ($792.55 million) over the past five weeks, according to Tran Thang Long, deputy CEO of brokerage BIDV Securities (BSC).
The executive said the prolonged foreign selling reflected a combination of global risk aversion, capital rotation into technology markets, and portfolio restructuring ahead of Vietnam’s formal transition into the emerging market index universe.
Speaking on the Pho Tai Chinh (Financial Street) talk show broadcast on Vietnam Television, Long said global investors are adopting a more defensive “risk-off” stance amid escalating geopolitical tensions involving the United States, Israel and Iran, as well as uncertainty surrounding U.S. tariff policies.
“These developments are prompting international funds to reduce exposure to risk assets and move toward safer havens,” he said.
Long added that global capital flows in recent years have increasingly concentrated on technology-related sectors, particularly in markets benefiting from semiconductor and artificial intelligence (AI) trends, including the United States, Europe, Japan and China.
Tran Thang Long, deputy CEO of brokerage BIDV Securities. Photo courtesy of the Pho Tai Chinh (Financial Street) talk show.Another factor behind the foreign outflows is the market status upgrade process itself. Frontier-market-focused funds are required to gradually divest Vietnamese holdings ahead of the reclassification, while emerging-market funds typically begin allocating capital only after the transition becomes effective and is implemented in phases.
Foreign ownership limits also remain a constraint, Long said. Although Vietnamese regulations allow foreign ownership of up to 100% in many sectors, a number of listed companies continue to maintain lower foreign ownership caps over concerns about potential takeovers.
Still, Long expects foreign capital to return to the market in the longer term, potentially from Q3 or Q4/2026, as FTSE Russell’s transition roadmap is scheduled to begin in September 2026 and continue through four phases until September 2027.
He added that expectations for Vietnam to be placed on MSCI’s upgrade watchlist during 2026-2027 could provide an additional boost to investor sentiment and attract more foreign inflows.
Regarding market performance, Long noted that Vietnam’s benchmark VN-Index recently surpassed 1,900 points to reach a short-term peak, though trading remains highly polarized and does not yet fully reflect corporate earnings or broader economic conditions.
Liquidity in the financial system is no longer as abundant as before, while interest rates have edged higher due to supply-demand imbalances in the money market, narrowing capital flows into financial assets, he said.
According to Long, investor interest is currently concentrated in large-cap stocks linked to themes such as public investment, corporate restructuring, market upgrades and policy expectations, while mid- and small-cap stocks continue to struggle to attract significant inflows.
He also said the market’s capital structure is evolving. Retail speculative flows, which once dominated trading activity, are gradually being replaced by domestic institutional investors focusing on fundamentally strong, highly liquid companies capable of leading the market.
The Vietnamese government is also pushing economic growth through public investment and structural reforms, while strengthening the role of state-owned enterprises and several key private-sector groups, Long said, adding that the stock market is increasingly reflecting expectations for a new economic structure.
“The fact that many investors are facing difficulties at this stage is not necessarily a negative signal,” Long said. “The market is becoming more mature in selecting companies based on business quality, industry positioning and policy cycles. This consolidation phase could provide a stronger foundation for sustainable long-term growth.”
Comparing Vietnam with regional peers, Long said Taiwan and South Korea’s stock markets have surged 43% and 77%, respectively, since the start of 2026, largely driven by a small number of heavyweight technology stocks.
In Taiwan, Taiwan Semiconductor Manufacturing Company alone accounted for about 44% of gains in the TWSE index this year, while together with MediaTek, Delta Electronics and Hon Hai Precision Industry, the four stocks contributed more than 60% of the benchmark’s rise.
In South Korea, SK Hynix, Samsung Electro-Mechanics, Samsung SDI and semiconductor equipment makers have led gains in the KOSPI index, benefiting from the global AI supply chain boom.
In Vietnam, around 117 points of the VN-Index’s gains this year have also come mainly from a handful of large-cap stocks, creating what local investors describe as a “green outside, red inside” market, where headline indices rise even as many individual stocks decline.
The trend reflects a concentration of domestic liquidity in blue-chip stocks to support benchmark performance while investors await further developments in Vietnam’s market status upgrade story, Long said.
Meanwhile, many manufacturing companies and mid-cap firms continue to face pressure from currency volatility, rising input costs and U.S. trade barriers.
Long said broader earnings growth across listed companies would be needed for the market to move beyond its current polarized state, with clearer improvements expected in the second half of 2026 as policy reforms begin to have a stronger impact on the economy.
