Long-term investor confidence holds

In the current macroeconomic environment, global investors are increasingly turning to safe-haven assets. Gold has temporarily lost its traditional role as a stable refuge, as oil and the US dollar have both surged amid escalating geopolitical tensions in the Middle East.

Against that backdrop, international investors have been net sellers across most markets. On March 31, the final trading session of the month, foreign investors continued to record net outflows, capping a full month of net selling in Vietnam’s equity market.

In total, foreign investors sold more than VND 32 trillion (approximately $1.3 billion) in the first quarter of 2026.

Explaining this trend, Ms. Ton Minh Phuong, Board Member and CEO of Vietcap Securities (VCI), pointed to several factors. First, widening interest rate differentials in recent years have driven exchange rate pressures, prompting foreign investors to reduce exposure to Vietnam’s stock market.

For large global investors, Vietnam typically represents only a small allocation within their broader portfolios. As global financial and geopolitical risks rise, their first reaction is often to exit positions in non-core markets—especially those that are liquid and have already delivered strong returns. In Southeast Asia, Vietnam stands out for its relatively high liquidity, making it easier for investors to exit compared to markets such as Malaysia or the Philippines.

Second, Vietnam’s upgrade by FTSE to secondary emerging market status has shifted the investor base—from frontier-focused funds to emerging market investors. “We expect that once Vietnam is fully upgraded, new investor segments and capital flows will enter the market, replacing those that have recently exited,” Ms. Phuong said.

Third, the lack of new, diversified listings remains a concern frequently raised by foreign investors. Vietnam’s stock market remains concentrated in a limited number of sectors and companies. However, reforms are underway: authorities are introducing new regulations linking IPOs more closely with listing requirements; companies are becoming more open to going public; and advisory firms such as Vietcap are working to bring a broader range of businesses to market.

Vietnam’s structural appeal remains intact

“Fundamentally, I believe Vietnam remains a destination of strong interest for global investors,” Ms. Phuong said, citing record FDI disbursement of $27.6 billion in 2025 - the highest in five years and total registered capital exceeding $38 billion. “Indicators for long-term capital inflows remain aligned with expectations.”

Vietnam’s commitment to macroeconomic stability is expected to include efforts to reduce reliance on bank credit, according to Ms. Nguyen Thanh Phuong, Chairwoman of Vietcap Securities.

Vietnamese businesses and economic growth more broadly remain heavily dependent on bank lending. Developing capital markets, including equities, to provide medium- and long-term financing is therefore essential to easing pressure on the banking system and strengthening competitiveness.

Between 2024 and 2025, around 97% of Vietnamese enterprises, mostly small and medium-sized enterprises (SMEs) relied heavily on bank credit. While banks account for roughly 83% of SME financing access, the proportion of firms actually able to secure funding remains limited.

Alternative channels—such as development funds, venture capital, and corporate bonds still account for only a small share of total financing. In some cases, companies unable to access formal credit have turned to informal or unregulated lending sources.

In 2025, strong credit expansion drove loan growth above 19%, pushing the credit-to-GDP ratio to approximately 147%. Dr. Can Van Luc, Chief Economist at BIDV, estimates that achieving Vietnam’s targeted GDP growth of 10% annually between 2026 and 2030 will require around $260 billion in capital equivalent to 39% of GDP.

Vietnam’s economy remains highly dependent on the banking system, which accounts for more than 50% of total capital supply. If credit growth continues at 16–17% annually, the credit-to-GDP ratio could rise to 180-185% by 2030, among the highest in the world.

To meet rising capital demands while mitigating systemic risks, policymakers have emphasized the need to expand alternative financing channels. State Bank Governor Nguyen Thi Hong has repeatedly underscored the importance of diversifying capital sources to ensure financial stability.

Toward a more diversified financial system

Behind the development of capital markets lies a broader structural shift toward diversified financing channels. As Vietnam’s financial system deepens and integrates globally, new instruments and market layers are emerging enhancing the country’s attractiveness to international investors.

Ms. Nguyen Thanh Phuong highlighted ongoing efforts, including market upgrades, the development of financial centers, tax policy adjustments for foreign investors, and the creation of trading platforms for technology firms.

“These measures will make it easier for foreign investors to participate, thereby attracting more capital inflows into the market,” she said.