Factors attracting foreign investment in the stock market: A case study of Vietnam

Abstract This study examines the determinants of foreign portfolio investment inflows into Vietnam's stock market from 2010 to 2023 using the system GMM estimator. Results reveal that stock dividend payouts, foreign ownership, profitability, and firm size significantly attract FPI, while exchange rate volatility and inflation deter it. The lagged FPI variable indicates momentum trading among foreign investors. Although ESG disclosure shows no significant effect, transparency and macroeconomic stability, especially in corruption control, enhance investment appeal. The findings provide policy implications for listed firms and regulators in improving corporate governance, disclosure quality, and macroeconomic consistency to sustainably attract foreign capital.