Why did foreign capital withdraw billions of dollars from the stock market?

Over the past five years, foreign capital has withdrawn tens of billions of dollars from the stock market due to global macroeconomic impacts.

Dr. Le Anh Tuan, financial expert - General Director of Dragon Capital, said that currently, the rate of holding Vietnamese stocks by foreign investors is at the lowest level in the region, only about 14.5%. Meanwhile, in many other markets, the rate of holding stocks fluctuates between 20 - 40%.

Dr. Le Anh Tuan, financial expert - General Director of Dragon Capital. (Photo: D.V)

According to Mr. Tuan, the stock holding rate of foreign investors in other countries is higher than in Vietnam, even though they have lower economic growth and face many uncertainties.

In 2024, foreign investors sold a net of 1 billion USD, which is a huge number. Currently, in one month, foreign investors have sold up to 1.6 billion USD. The reason for foreign investors' net selling is because of internal factors and external economic factors affecting the market.

According to Mr. Tuan, Vietnam's foreign exchange reserves are currently under 80 billion USD, equivalent to 3 months of imports. Since the beginning of the year, foreign investors have withdrawn nearly 5 billion USD from the stock market. If calculated over the past 5 years, foreign investors have withdrawn about 12 billion USD.

“Without this capital withdrawal, Vietnam’s foreign exchange reserves would be much higher and macroeconomic stability would be better consolidated. Therefore, it can be said that Vietnam’s financial market is not highly appreciated. It is still interested, but not properly interested compared to its real potential,” said Mr. Tuan.

Mr. Tuan assessed that 2026 will be the time when the stock market "resets" (returns to the original state), when Vietnam's return compared to other countries in the region and the world is re-established at a new level.

Foreign investors have been net sellers for a long time. (Photo: BL)

According to economic expert Tran Thang Long, in the past 5 years, foreign investors have withdrawn billions of dollars from the stock market for many reasons.

First is interest rate fluctuations. From mid-2022, the US Federal Reserve (Fed) has continuously raised interest rates, causing high US bond yields. This will cause investors to withdraw capital from emerging markets like Vietnam to return to safe assets in USD.

In addition, the rising USD makes the exchange rate risk higher when holding assets in VND. This leads to many foreign funds reducing their proportion in Vietnam.

According to Mr. Long, the strong reversal of global capital flows is also the reason why foreign investors gradually withdraw from the domestic market. ETFs (listed and traded on the stock market) such as VanEck Vietnam ETF, FTSE Vietnam Index ETF, iShare Frontier Markets ETF have been continuously withdrawn.

In addition, when cash flows out, these ETFs must sell Vietnamese stocks to repay investors.

Regarding domestic factors, Mr. Long assessed that after 2022, many listed enterprises in the real estate, banking, steel... sectors will see slower growth and reduced profits. This will also reduce their attractiveness to foreign investors.

In addition, VND also depreciated against USD. The depreciation of VND is equivalent to a decrease in profits when converted to USD, so investors will be more cautious. These are the main reasons why foreign capital has withdrawn from the stock market in recent times.

Foreign capital flows into processing and manufacturing industry

According to the General Statistics Office, in the first 10 months of 2025, the total registered foreign investment capital (FDI) in Vietnam as of October 31 reached more than 31.5 billion USD, an increase of 15.6% over the same period last year.

The processing and manufacturing industry reached the highest level with nearly 17.7 billion USD, accounting for 83% of total realized foreign direct investment; real estate business activities reached 1.5 billion USD, accounting for 7%; production and distribution of electricity, gas, hot water, steam and air conditioning reached nearly 672 million USD, accounting for 3.2%.

DAI VIET

Source: https://vtcnews.vn/vi-sao-dong-von-ngoai-rut-ca-ty-usd-ra-khoi-thi-truong-chung-khoan-ar985620.html