According to VnExpress statistics, foreign investors poured over 267,600 billion VND into the Vietnamese stock market during the first six months of the year but sold around 308,300 billion VND. The net withdrawal reached 40,700 billion VND, equivalent to $1.5 billion USD.

On the Ho Chi Minh City Stock Exchange (HOSE) alone, foreign investors net sold over 37,000 billion VND. The stocks facing the most selling pressure were large-cap stocks like FPT (9,306 billion VND), VIC (6,063 billion VND), and VHM (4,323 billion VND).

Foreign investors' most significant sell-off occurred in April, coinciding with a sudden market correction triggered by tariff news. This selling streak was interrupted by a surge of investment during the market's recovery in May, only to resume in June.

This trend continues a net selling streak initiated by foreign investors two years ago. In 2023, they net sold approximately $1 billion USD. Last year, this figure increased to a record $3.55 billion USD for the Vietnamese stock market.

Nguyen The Minh, Director of Retail Client Analysis at Yuanta Securities Vietnam, identified three primary reasons for this continued capital outflow.

The first and most impactful reason is the interest rate differential between the USD and the Vietnamese dong. Since 2023, the US Federal Reserve (Fed) has maintained high interest rates, while domestic rates remain low to support economic growth. This has resulted in higher yields for USD compared to the Vietnamese dong, prompting capital to flow back to more efficient markets.

Second, foreign investors are restructuring their portfolios due to concerns about policy uncertainty, particularly regarding tariffs imposed by the Trump administration. They are reducing their holdings in Asian stocks, including Vietnamese ones, to reinvest in the US market, especially in technology stocks considered promising despite high valuations.

Third, foreign investors are selling some large-cap stocks as their convertible bond holdings mature and are converted into shares.

"Foreign investor withdrawals are not entirely due to internal factors within Vietnam, but mainly stem from the need for portfolio rotation and restructuring," Minh said.

Despite the continuous net selling by foreign investors, the VN-Index rose 8.6% (110 points) to 1,376 points by the end of June. This indicates that the market is becoming less susceptible to foreign capital flows. Conversely, the influence of domestic investors, especially individual investors and institutional investors such as businesses, is gradually increasing.

"The influx of domestic investor capital has been very strong, especially in May and June, as the market recovered from the tariff shock," said Tran Thi Hong Nhung, Deputy Director of Investment Analysis and Consulting at Guotai Junan Securities (Vietnam).

Five years ago, foreign investors accounted for approximately 18-20% of quarterly trading value. This percentage has recently fluctuated around 10-12% and has even dropped to 8% in some quarters. Domestic institutional investors are becoming increasingly dominant. In the most recent quarter, institutions including investment funds, securities companies, and businesses accounted for 30% of trading value.

In its mid-year strategy report, VNDirect Securities stated that net selling pressure decreased significantly in Quarter II to 13,900 billion VND, compared to 25,900 billion VND in Quarter I. In May, foreign investors bought stocks thanks to renewed confidence in the global trade outlook, efforts to promote bilateral trade negotiations, and a positive macroeconomic environment.

According to The Minh, this is a positive sign, suggesting that foreign investors are gradually shedding their concerns about policy and geopolitical instability. They are willing to divest from highly valued technology stocks in the US to seek more attractive investment opportunities in frontier and emerging markets, including Vietnam.

He believes that a shift to a sustained net buying trend could occur in October or November of this year. This forecast is based on the assumption that the Fed will cut interest rates once or twice towards the end of the year, helping to narrow the yield gap between the USD and the Vietnamese dong.

Sharing this view, Nhung added that, in addition to reduced exchange rate pressure, the Vietnamese stock market has another factor that could attract foreign capital in the final months of the year: the possibility of a market upgrade.

Nhung cited the example of the State Securities Commission (SSC) chairman expressing hopes for a market upgrade in the September evaluation period, which triggered an immediate positive reaction from foreign investors. In the first three trading sessions of July, they net bought over 2,800 billion VND. The stocks that saw strong inflows were mainly in the securities and banking sectors, such as SSI, MWG, CTG, HCM, and VCI.

Phuong Dong