Foreign ownership limits (room)

Vietnamese companies limit how much of their shares foreign investors can hold. This cap is the foreign ownership limit, or room. For many companies the default is 49 percent, though some sectors are lower and a few allow more.

Running out of room

When foreign investors have bought up to the limit, a stock is said to be out of room. New foreign buyers then have to wait for someone to sell, and may pay a premium to get in.

A demand signal

Room is a supply-and-demand signal. A stock consistently at its foreign limit shows strong international demand that the cap is holding back, and foreign flows in and out of room are watched closely.

Why it matters

For sectors like banking the limit is lower, so foreign room can shape who is able to move a stock. Knowing a stock's room helps explain unusual foreign flows.