Record ETF Outflows Despite VN-Index Hitting New Highs Reflect Profit-Taking and Portfolio Rebalancing

Economic

Stocks

Summary:

In early August, ETFs withdrew over 1,400 billion VND from Vietnam’s stock market, marking the strongest weekly outflow of 2025, even as the VN-Index reached a historic 1,600 points. ...

Sharp Weekly Outflows Led by Foreign ETFs

From August 4 to 8, ETF capital flows investing in Vietnamese equities recorded net outflows exceeding 1,200 billion VND the largest weekly withdrawal since the start of 2025. Twelve of 20 ETFs tracked saw capital reductions, with the Fubon FTSE Vietnam ETF leading the outflow at 771.9 billion VND. This fund has withdrawn a total of 5,700 billion VND year-to-date, despite delivering a 21.6% return in the first half of 2025. Domestic ETFs also saw significant redemptions, with Dragon Capital’s VFM VNDiamond ETF and VFM VN30 ETF shedding 210 billion VND and 182 billion VND respectively, alongside smaller sales from MAFM VN30 ETF.

The top 20 stocks facing the largest ETF net sales last week were dominated by blue-chip names. VHM and VIC from the Vingroup ecosystem led with 120 billion VND and 116 billion VND in outflows, followed by HPG with 97 billion VND. Other notable stocks affected included MSN, VCB, and SSI. This pattern underscores that ETF rebalancing has a direct and concentrated effect on large-cap, high-liquidity counters, which are often key constituents in index-based funds.

Contrasting Foreign Selling with Domestic Buying

While foreign ETF flows have been negative, domestic investors have actively absorbed the selling pressure. This absorption has allowed the VN-Index not only to hold but also to break above the 1,600-point milestone. The divergence suggests that foreign profit-taking and tactical reallocations are more of a short-term portfolio strategy than a structural withdrawal from the Vietnamese market.

Industry experts note that the recent wave of foreign selling is occurring in parallel with global capital rotation. As global funds reduce exposure to developed markets such as the U.S., there is increasing allocation toward emerging markets including China, Taiwan, India, and Southeast Asia. Vietnam stands to benefit from this shift, especially if FTSE Russell upgrades its classification to Emerging Market status, which could attract an estimated 2–3 billion USD in additional foreign capital.

Vietnam’s economic recovery phase, combined with government initiatives in technology, private sector development, and double-digit growth targets, creates a supportive environment for equity market expansion. The structural reforms in progress not only position Vietnam as an attractive destination for long-term foreign investment but also underpin domestic confidence in absorbing short-term volatility from ETF outflows.

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