Opportunity to attract foreign capital from Vietnamese securities: Strong growth prospects

In the most optimistic scenario, FTSE reclassification could bring up to $10.4 billion to Vietnam's stock market.

On September 5, the Vietnamese stock market once again surprised investors. Immediately after 15 minutes of opening order matching, the VN-Index jumped nearly 13 points, officially surpassing 1,700 points, an unprecedented milestone in the market's 25-year history.

Outlook remains positive

Because, just a few months ago, when the market was still struggling in the 1,400 - 1,500 point range, few people dared to imagine that one day in the not too distant future, the VN-Index could rise to this threshold. However, since the deep decline in April, the strong recovery momentum has continuously brought the market up, opening one of the most exciting periods of Vietnamese stocks.

By the end of the morning session, the excitement was still maintained, but after 2 p.m., selling pressure suddenly increased, causing the VN-Index to reverse sharply, falling nearly 30 points. At the end of the session, the index fell to 1,666.97 points - the sharpest decline in the past 10 days. The securities group led the decline with a decrease of more than 4.2%, banks lost 2.45%, while real estate only decreased by less than 1%. Foreign investors also maintained a net sale of nearly 1,400 billion VND, focusing on banking and securities stocks such as HCM, VND, VCI, VIX.

Mr. Tran Minh Tam (HCMC), an investor who loves bank stocks, shared the feeling of "going on a roller coaster" when witnessing the market fluctuate so quickly. "Early in the afternoon, I bought 4,000 MBB shares at VND28,200 but just one hour later, the price dropped to VND27,400, causing me to lose 3%. It was truly a trading session full of surprises" - Mr. Tam said.

However, many securities companies and financial institutions believe that this adjustment is only short-term and the market outlook is still very positive. In particular, expectations for market upgrades are becoming a major driving force. The latest report from the Global Investment Research Department of HSBC Vietnam International Bank said that FTSE - the global stock market rating and rating organization will consider upgrading Vietnam from the frontier group to emerging in the October 2025 review. Currently, Vietnam has met 7/9 criteria set by FTSE, of which the remaining 2 criteria on "payment cycle" and "failure transaction costs" are being improved thanks to the new KRX trading system that has been operational since May.

"Despite the impact of US tariff policies, VN-Index has still increased by about 40% since the beginning of the year and is one of the best performing markets in the world . The upgrade means that Vietnam will be automatically included in the indexes. It is estimated that the upgrade can help attract an additional 3.4 billion USD to flow into the stock market" - HSBC experts said.

For active funds, HSBC forecasts capital inflows into the stock market to range from US$1.9 billion to US$7.4 billion, depending on the weighting of Vietnam in the index. In the most optimistic scenario, FTSE's reclassification could bring up to US$10.4 billion to the Vietnamese stock market, but allocated in stages.

Vietnam's stock market is currently one of the strongest growing markets in the region. Photo: HOANG TRIEU

"Sharing the fire" for the credit system

According to experts, upgrading Vietnam's stock market is not only a technical step forward but also opens up opportunities to attract foreign capital, especially from institutional investors. When this capital flows more strongly into the market, securities will become an important capital mobilization channel, contributing to "sharing the fire" for the banking credit system, while promoting sustainable development.

Associate Professor Dr. Nguyen Huu Huan, lecturer at the Ho Chi Minh City University of Economics (UEH), analyzed that for securities to truly become an effective capital mobilization channel, Vietnam needs more institutional investors, especially foreign ones. At the same time, the market must supplement quality goods, meaning that many large enterprises in the production and trading sectors need to list on the stock exchange to attract foreign capital flows.

He also emphasized the role of investment funds, saying that this form needs to be further developed to encourage individual investors to entrust instead of directly buying and selling.

"In developed countries, the trading rate of individual investors only accounts for a small portion, while in Vietnam this figure is up to 85%-90%. If we want the market to be stable and less volatile, we must promote professionalization through funds," said Mr. Huan.

This expert also suggested that the market needs to increase the quantity and quality of listed goods, ensure financial transparency, and develop more derivative products to create diversity and attract more institutional investors.

Dr. Nguyen Anh Vu, Head of the Faculty of Finance and Banking, Banking University of Ho Chi Minh City, said that the Vietnamese stock market has seen a clear improvement in liquidity. If calculated from the bottom of more than 1,200 points in early April until the VN-Index reached 1,700 points, the index has increased by about 35%, an impressive figure in history. In particular, there were record trading sessions, with liquidity exceeding 3 billion USD (equivalent to 80,000 billion VND), making the Vietnamese stock market one of the strongest growing markets in the region.

According to Mr. Vu, these positive results come from many internal factors: The Government promotes administrative reform, streamlines the apparatus, and at the same time promotes private economic development and large-scale transport infrastructure projects.

More importantly, procedural and legal bottlenecks in real estate have been gradually removed, while monetary policy has been loosened, creating conditions for capital to flow into the market. These are also the fundamental driving forces for Vietnam to move towards upgrading its securities market.

Foreign capital only participates after upgrading

Mr. Vu added that in the current context, the market is very likely to attract ETFs, which often invest in anticipation when a market is upgraded from frontier to emerging. This means that large-cap stocks, especially in the VN30 basket, will receive more attention. However, he also warned investors to be cautious.

"Normally, the market tends to increase before the upgrade expectation because of the fear that when the official results are out, the opportunity will be missed. But in reality, foreign capital only really participates strongly when the upgrade decision is announced. Therefore, the medium-term trend of the market is still positive, but there will be adjustments when reaching important psychological milestones and that is completely normal. The market needs such adjustments to develop healthily and sustainably," said Mr. Vu.

He also emphasized that the nature of the upgrade does not immediately change the business results of all enterprises. "The VN-Index may increase sharply, but stock prices do not increase evenly. Some stocks remain flat, while others increase too quickly, causing the P/E valuation to be pushed up. Therefore, investors need to be alert in choosing businesses with good business foundations to hold for the long term, instead of chasing short-term waves," the expert noted.

Source: https://nld.com.vn/co-hoi-hut-von-ngoai-tu-chung-khoan-196250905220019246.htm