Stock market enters new cycle as reforms, foreign inflows converge

Stock market enters new cycle as reforms, foreign inflows converge

Despite record net foreign outflows in 2025, many experts view those withdrawals as cyclical rather than structural, while medium- and long-term fundamentals remain supportive.

Traders work on a trading floor of a securities firm. — VNA/VNS Photo

Việt Nam's stock market is poised to enter a new development cycle, underpinned by structural reforms, market infrastructure upgrades and prospective foreign capital flows, insiders said.

Despite record net foreign outflows in 2025, many experts view those withdrawals as cyclical rather than structural, while medium- and long-term fundamentals remain supportive.

A recent report by SSI Securities Corporation (SSI) showed that the market entered 2026 with strong growth momentum, with the benchmark VN-Index approaching its base-case target of 1,920 points earlier in the year before correcting in March. The pullback was largely attributed to profit-taking, interest rate concerns and geopolitical uncertainties and was viewed as tactical rather than indicative of a reversal in the long-term trend.

Underlying fundamentals continue to support the market outlook. Analysts pointed to robust economic growth, large-scale infrastructure investment and a shift of domestic capital back into equities as other asset classes such as real estate and gold cool down. In addition, a pipeline of initial public offerings (IPOs) is expected to expand market depth and improve liquidity.

Market classification upgrades remain a central theme shaping investor expectations.

According to SSI, Việt Nam could attract approximately US$1.67 billion in passive inflows from global exchange-traded funds if it is upgraded by FTSE Russell, with disbursements likely to be phased over three to five quarters to mitigate volatility.

Beyond FTSE, MSCI is seen as the next milestone over the medium to long term.

Ongoing reforms, including the removal of pre-funding requirements, the introduction of a central counterparty clearing mechanism (CCP), enhanced English-language disclosure and foreign ownership limit adjustments, are expected to bring Việt Nam closer to meeting international criteria.

SSI estimates the market could satisfy 17 out of 18 MSCI requirements once these improvements are completed.

Bùi Hoàng Hải, vice chairman of the State Securities Commission (SSC), said that although the country remains a regional growth bright spot with a stable macroeconomic foundation and strong market expansion, foreign investors still recorded net withdrawals of more than $5 billion in 2025.

He attributed the outflows largely to global capital cycle dynamics, noting that many leading financial institutions and corporations have continued to engage with Việt Nam, reflecting sustained interest in the market. At the same time, progress in upgrade efforts, technological infrastructure and the legal framework has improved investment conditions.

Market participants stressed that foreign outflows do not signify a decline in investor confidence.

Nguyễn Ngọc Anh, CEO of SSI Asset Management (SSIAM), said the trend has been in place since 2024 and extended into 2025, yet the market still posted strong gains of around 12 per cent in 2024 and approximately 41 per cent in 2025.

The fact that the market continued to grow strongly shows that investors who exited may have missed significant opportunities, she said.

According to Ngọc Anh, market liquidity has been improving while the composition of foreign investors is undergoing a transition. Previously concentrated among a few large funds in East Asia, capital flows are now increasingly coming from the United States and other developed markets.

This is a period of structural transition in capital flows, where withdrawals by some large funds could be misunderstood as a broader global trend, she noted. 

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