Exchange-traded fund (ETF) capital continued to flow out of the Vietnamese stock market in the first half of May. (Photo: baodautu.vn)

Exchange-traded fund (ETF) capital continued to flow out of the Vietnamese stock market in the first half of May, signalling lingering caution among foreign investors despite optimism surrounding ongoing trade negotiations and Vietnam’s potential market upgrade.

According to data from FiinTrade and SSI Research, ETFs posted a net outflow of over 210 billion VND between May 12 and 16, marking the second consecutive week of withdrawals.

This brought the year-to-date outflow to more than 6.8 trillion VND (261.9 million USD). As of May 16, total net assets held by ETFs in Vietnam stood at approximately 52.4 trillion VND, a 7.8% drop compared to the end of 2024.

The withdrawals were particularly concentrated in domestic ETFs, especially the VFM VNDiamond ETF-the largest among local ETFs - which saw net outflows of nearly 74 billion VND last week and over 600 billion VND in April alone.

Other funds, such as VFM VN30 ETF, DCVFMVN30 and KIM Growth VNFINSELECT also witnessed significant redemptions. Only a few, including MAFM VN30 and KIM Growth VN30, recorded slight inflows.

Foreign ETFs likewise showed no signs of a significant rebound. Fubon FTSE Vietnam ETF, VanEck Vietnam ETF and Xtrackers FTSE Vietnam Swap UCITS ETF continued to experience net redemptions throughout April and early May.

Although Fubon saw a minor inflow of 7 billion VND on May 19, it was not enough to reverse the persistent trend of outflows that has continued since the beginning of the year.

In April alone, ETF net outflows totalled 2.54 trillion VND. Since peaking in July 2023 at around 83.1 trillion VND in assets under management, total assets held by ETFs in Vietnam have fallen below 50 trillion VND - the lowest in nearly two years.

Analysts say the continued ETF outflows reflect short-term instability in the investment environment, particularly concerns over US tariff policies, exchange rate volatility and valuation in major global markets. Nevertheless, direct foreign investor trading via matching orders on the domestic exchange provided some relief, with net buying reaching 2.88 trillion VND in the week of May 12-16 - the highest level in two years.

Speaking to vneconomy.vn, Head of Retail Research at Yuanta Securities, Nguyen The Minh, noted that the easing of Vietnam’s five-year credit default swap rate and a global shift away from US markets could create conditions for capital to return to Vietnam in the next few months.

He also pointed to renewed optimism over trade talks between Vietnam and the United States, as well as the country’s ongoing efforts to secure an upgrade to emerging market status./.