Vietnam’s Stock Market Has Just Been Upgraded—Why Are Foreign Investors Selling First?
On September 21, Vietnam officially upgraded from FTSE Russell’s “Frontier Market” to “Secondary Emerging Market.” The market had originally expected more foreign capital to enter after the upgrade, but the first week’s numbers were exactly the opposite: from September 21 to 25, foreign investors net sold about US$100 million.
But if you break down that week’s trading, you will find that this money does not mean foreign investors have begun leaving Vietnam. Some funds had already completed their positioning earlier, while another part of the capital took advantage of the upgrade’s official implementation to readjust holdings.
Vietnam’s stock market has officially been upgraded to FTSE Secondary Emerging Market. In the short term, foreign inflows and outflows reflect capital reallocation after the positive news officially took effect. Image source: https://nhadautu.vn/
In the First Week After the Upgrade, Stocks Were Sold First—the Reasons Are Actually Not Complicated
VnExpress, citing analysis by Vietnamese financial institutions, pointed out that the first batch of passive funds tracking the FTSE index had already completed a first-round allocation of about US$220 million before the official upgrade. This round accounts for 10% of the final weight. Therefore, after September 21, there was no immediate new buying of the same scale.
Active funds behave differently. Many funds began allocating to Vietnamese stocks months in advance. After the upgrade officially took effect, some investors chose to take profits first and then rearrange their portfolios. This is an important reason for the foreign net selling in the first week.
In addition, global capital has recently been looking for new destinations. U.S. tech stocks, Japanese and Chinese tech sectors are all quite attractive, and Vietnam needs to compete with other markets for capital. In the first nine months, foreign investors cumulatively net sold about US$3.6 billion in the Vietnamese stock market.
After Vietnam officially completed the FTSE upgrade, foreign investors net sold about US$100 million in the first week, and market capital is still being readjusted. Image source: https://vietstock.vn/
Foreign Investors Are Actually Still Buying—Just Switching Stocks
If you only look at “US$100 million in net selling,” it is easy to think foreign capital is withdrawing from Vietnam. But looking at individual stocks, the situation is not so one-sided. In the first week, foreign investors sold more large-cap stocks: Vinhomes (ticker: VHM) was net sold about US$30 million, VPBank (ticker: VPB) about US$16 million, and Techcombank (ticker: TCB) about US$12 million.
At the same time, foreign investors also bought some stocks, including Thanh Thanh Cong – Bien Hoa Joint Stock Company (ticker: SBT), Masan Consumer Corporation (ticker: MCH), Binh Son Refining and Petrochemical Company (ticker: BSR), and Masan Group (ticker: MSN). Sputnik, citing market data, showed that foreign investors still maintained buy orders in these stocks.
This means that what is happening now is more like a round of capital reallocation. Some large-cap stocks had risen considerably earlier, so investors first pocketed gains; on the other hand, some shifted funds to companies or sectors they favored more. HSC believes that the foreign selling pressure in the first week remained relatively mild, and capital flows among different market sectors are diverging.
In the first week after the upgrade, foreign selling pressure was concentrated in some large-cap stocks, while funds also flowed to other stocks. The market is reallocating. Image source: tapchikinhtetaichinh.vn/
真正的大筆資金，還要等後面的三輪調整
The FTSE Russell upgrade is not completed in one day. Under the current arrangement, the first tranche has completed 10% inclusion. Next, there will be three more rounds of adjustment in March, June, and September 2027. The remaining three rounds of passive fund allocation may bring about US$2 billion more; if active funds are included, the total potential capital size may approach US$6 billion.
Therefore, the US$100 million net sell in the first week is actually just a very small time window. What really needs to be watched is whether foreign investors will continue to increase their allocation to Vietnamese stocks over the next few quarters, and which companies can truly absorb this capital.
For Vietnam, another change brought by the upgrade is increased market exposure. When more international institutions begin to include Vietnam in their emerging-market allocation scope, fund managers, research institutions, and global investors will also have more opportunities to engage with Vietnamese companies.
The FTSE upgrade will advance in stages. There are still three index adjustments in 2027, and Vietnam’s stock market still has room for new capital allocation. Image source: https://baochinhphu.vn/
Final Take: The Real Impact of the Upgrade Will Take Years to See Clearly
The first week’s foreign net sell of about US$100 million cannot prove that the FTSE upgrade has had no effect. Looking at trading conditions, some passive funds had already bought in advance, and active funds are also readjusting their holdings. There are still three more rounds of index inclusion in the future, and capital allocation will continue to change.
What truly deserves attention is which enterprises can catch international capital after the FTSE upgrade. For large banks, real estate, and consumer companies, after foreign allocation increases, future financing, bringing in external shareholders, and equity exits will all have more options.
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