An investor stands next to an electronic board that shows Vietnamese stock price movements. Photo courtesy of Thoi bao Tai chinh Vietnam (Vietnam Financial Times).

Global conditions have become more favorable, with trade issues easing and the Fed moving toward lower interest rates. Domestically, Vietnam’s stock market was recently upgraded by FTSE Russell to "secondary emerging" market status, effective from September 11, 2026 - a move that could attract more global investors, Chung noted.

The State Securities Commission of Vietnam (SSC) said several large international funds managing hundreds of billions to trillions of U.S. dollars are showing interest in Vietnam’s market. However, foreign investors have continued to strongly sell shares in recent months, prompting questions about why inflows have yet to materialize.

Speaking on the recent Finance Street talk show, Chung cited a mix of global and local factors behind the continued outflows.

First, U.S. interest rates remain relatively high, discouraging capital from leaving the country. The Fed’s October 29 meeting cut rates by another 25-50 basis points - the second reduction this year - bringing the federal funds rate to around 3.5-4%.

Despite this, yields remain higher than in emerging markets like Vietnam. Narrowing VND-USD rate differentials have also kept foreign investors cautious, preferring to hold funds in U.S. Treasuries.

Secondly, recent profit-taking after the VN-Index’s sharp rally and portfolio rebalancing have weighed on flows. The index surged to 1,600-1,700 points in Q3 on the back of the FTSE upgrade and solid growth. Many foreign funds took profits in blue-chip stocks such as banks and property developers, while restructuring portfolios ahead of Vietnam’s official market reclassification.

Finally, the FTSE upgrade is still in the transition phase. The reclassification takes effect on September 21, 2026, with a detailed review in March 2026. Funds are therefore waiting before reallocating capital, leading to temporary net selling. “This is a transition period, and outflows are likely to narrow as the Fed continues easing,” Chung said.

Ho Quoc Tuan, a senior lecturer at the University of Bristol, the UK, said the trend of foreign outflows is not unique to Vietnam but seen across Asia. After recovering strongly following tariff-related shocks earlier this year, foreign capital has flowed unevenly - with inflows into South Korea and Japan, while exiting China and being redistributed across ASEAN.

Vietnam remains attractive with GDP projected to grow 8% in 2025 (to about $510 billion) and a target of 10% growth in 2026, driven by public investment and export recovery.

This is enough to attract foreign capital, especially after the market status upgrade, although currently large funds such as Vanguard and BlackRock are only initially interested and waiting for the official effect in September 2026 to allocate (about 0.6-1% of the portfolio).

Chung expects foreign capital inflows to stop net selling and begin net buying between late 2025 and early 2026. “Transactions by domestic investors, averaging $1-2 billion per session, will remain the main driver in the short term,” he said.

Over the longer term, from 2026 onward, Vietnam could see strong inflows of $3-5 billion from passive funds tracking FTSE and MSCI indices, plus $1.5-2 billion per session from active funds, according to Chung. The World Bank Group estimates total foreign inflows into Vietnam could reach $5-7 billion, potentially pushing the VN-Index to 1,800-2,200 points.

Vietnam is expected to emerge as a “rising star” in the region, with a low 2026 price-to-earnings ratio of 12 times, robust growth, and deeper global integration under trade pacts such as CPTPP and EVFTA.

Le Quang Chung, deputy CEO of SmartInvest Securities JSC (left) and Ho Quoc Tuan, a senior lecturer at Bristol University. Photo courtesy of talk show Financial Street.

Sharing the same view, Dr. Ho Quoc Tuan said that the story of foreign capital flow is just a matter of time. With the upgrade and the current growth momentum of Vietnam, investors are looking at Vietnam as really serious with a growth rate of more than 8% this year and reaching double digits next year.

Still, Tuan noted that currency stability remains a key concern for foreign investors. “Exchange rate management will be critical to maintaining investor confidence,” he said.

“Beyond foreign flows, domestic inflows also matter,” he added. “Government policies that encourage capital market development and offer incentives for investors will help strengthen local participation. When domestic money is strong, foreign investors will feel more confident entering the market.”