The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Vietnam: Trading restrictions create market distortions

Foreign buying of ETFs affecting valuations; Lack of liquidity creating dangerous pressure

Restrictions on how exchange traded funds can invest are creating distortions in Vietnam’s stock markets, according to sources in the country. Vietnam’s two stock markets, based in Hanoi and Ho Chi Minh City, have been increasingly volatile in recent months as a run of bad news, including the devaluation of the currency, the default-induced restructuring of a big state-owned company and rising inflation have all spooked short-term investors.

Before that recent run of bad news, foreign investors had been buying into Vietnam’s markets in huge volumes thanks to the broadened access provided by new investment vehicles. Fund managers and investors in Vietnam, however, are concerned that investment limitations affecting these funds are driving up valuations of the companies they track to unrealistic levels while exposing investors to a potentially dangerous crash.

Access to Vietnam’s stock markets is controlled, with set quotas for foreign ownership of each stock. With these allocations almost full, the two overseas-listed exchange traded funds that track Vietnam offer foreign investors an easy way to bet on the country’s growth. But because these ETFs are themselves restricted in which stocks they can buy, the year-long surge of interest in them is having a distorting effect on those very stocks.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree