Which stocks attract the most money after FTSE upgrade?

Being included in FTSE’s indexes will cause passive investment funds using these indexes as a reference to adjust their portfolios, thereby creating more demand for buying Vietnamese stocks. According to the official announcement, 27 stocks were added to the FTSE Global Equity Index Series (GEIS), including VCB, VIC, VHM in the large capitalization group; BID, HPG, VPB in the mid-cap group and 21 small-cap codes.

The expected passive cash flow allocated to this group of stocks is not small, but will not be disbursed simultaneously. According to the roadmap, the funds will allocate 10%, 20%, 35% and 35% respectively in 4 installments from September 2026 to September 2027. The first tranche is 10% and is considered certain, while rates in later tranches are subject to reassessment by FTSE.

The size of capital flows is not simply proportional to whether a stock is on the list. Large-cap stocks with high weightings in the index tend to receive a larger share of capital.

In the base scenario of BIDV Securities (BSC), about 1.47 billion USD is allocated to 27 stocks in all 4 legs. The three codes that received the most were VIC with about 241.7 million USD, VHM with 117.2 million USD and HPG with 102.9 million USD. These three shares alone account for about 31.5% of the total expected capital. In the positive scenario, the total cash flow is about 2 billion USD and the above 3 codes continue to be at the top, with VIC about 653.9 million USD, VHM 242.1 million USD and HPG 123 million USD.

Meanwhile, SSI Research offers a larger scale in the base scenario, about 2.2 billion USD in cumulative passive capital flows in 4 periods if the proportion of Vietnam in FTSE Emerging All Cap remains around 0.49%. Of which, the first installment in September is expected to be about 221 million USD; The following installments are about 442 million, 773.5 million and 773.5 million USD respectively.

Notably, in the first disbursement, not the entire amount will be purchased on September 21. SSI believes that funds can restructure during the entire period around the effective date, instead of focusing only on a single ATC session.

Comment with VnExpressMr. Thomas Nguyen, Director of Foreign Markets of SSI, said that when assessing the impact of index cash flows on stock prices, it is important not only how much money the fund will buy, but also how many days of normal liquidity the stock will have.

For example, if a fund needs to buy 6 million USD of stocks with an average trading value of 2 million USD per day, the purchase amount is equivalent to 3 days of liquidity. This would have a much larger impact than $6 million poured into a stock that trades $10 million a day. In reality, if the fund only took about 20% of liquidity each session to limit the impact on price, an order equivalent to 3 trading days could take about 15 sessions to complete.

This also explains why stock prices can react before passive cash flows actually appear. When the market knows a large amount of demand is about to be created, event-driven funds, active investors and individuals can buy in advance to get ahead. By the time the ETF makes a transaction, part of the expectation is already reflected in the price.

SSI experts note that investors need to use the cash flow of each phase, instead of taking the entire expected number of 4 phases to evaluate buying force in September. If we take the entire amount of accumulated capital compared to current liquidity, the level of impact on price will be exaggerated.

After the initial purchase is completed, mechanical demand will decrease. Stocks that have risen sharply thanks to cash flow expectations may see profit-taking activities. However, SSI experts believe that we should not assume that every increase thanks to the index’s cash flow will reverse, because stocks can still continue to receive allocations in future rounds if they maintain a large proportion in the index.

Therefore, for individual investors, Mr. Thomas Nguyen recommends distinguishing between one-time cash flows and repeatable cash flows. Vietnam will be included in FTSE in 4 phases until September 2027. If free float increases, foreign room improves, more qualified large-cap businesses appear, or foreign investor access is better, Vietnam’s proportion in the indexes could continue to increase and create more buying demand.

The role of stocks in the index is also an important factor to evaluate. Passive funds do not decide whether to buy a stock or not based on whether the P/E valuation is high or low, they must allocate according to index weight. Therefore, businesses with large proportions can continue to receive cash flow even when valuations are no longer cheap.

However, this does not mean investors can ignore fundamental factors. Index capital flows can add momentum to prices, but in the long term, the business’s prospects are still the decisive factor.

“The most sustainable opportunities will lie at the intersection of many factors: significant weighting in the index, recurring passive capital flows, good liquidity, growing international investment capacity, demand from active funds, supportive national policies and a reliable long-term business story,” said Mr. Thomas Nguyen.