Cash flow into stocks near 3-year low: Early Tet holiday or something else?

Cash flow into the stock market has been increasingly depleted in recent sessions. In addition to the "seasonal" factor due to the approaching Tet holiday, many other reasons have been pointed out to have an impact on liquidity.

Stock market liquidity is sluggish as Tet approaches - Photo: QUANG DINH

At the end of the trading session on January 9, VN-Index decreased slightly but liquidity only reached over 6,600 billion VND, the lowest level in the last 3 years. In the morning session this morning (January 10), HoSE also recorded only over 3,500 billion VND.

In addition to seasonal factors such as low market liquidity near Lunar New Year due to investors focusing more on the holiday, experts also pointed out many other reasons.

Foreign investors withdraw money, domestic cash flow disperses when interest rates are higher

According to SGI Capital experts, unlike the context in early 2024, the Vietnamese stock market will enter 2025 with less favorable conditions as two important driving forces, cash flow and internal corporate growth, both show significant signs of weakening.

In the context of loose monetary policy running out of room, the State Bank's 16% credit growth plan for 2025 requires the banking system to mobilize a correspondingly large amount of capital.

This could cause interest rates to increase more than expected and negatively affect domestic cash flow in the stock market, which has dried up after net selling by foreign investors and issuance from listed enterprises, analysts from SGI Capital said.

Typically, periods of monetary easing always see strong domestic cash flows into the stock market and even overwhelm foreign supply to maintain positive momentum for the market.

However, when the easing period passes, interest rates increase again, domestic cash flow weakens, causing liquidity to decrease, and the risk of price decline will increase if foreign investors continue to net sell or there are events that cause a sudden increase in supply, SGI Capital further explains the liquidity story.

Not only SGI Capital, most analysts see the major concern of the Vietnamese stock market in 2024 and 2025 as net selling pressure from foreign investors.

Last year's record net selling of more than VND94 trillion prevented the VN-Index from surpassing the 1,300-point mark, even though domestic cash flow participated strongly and absorbed this supply well.

Recently, Vietnam has been a market with strong net sales in 4/5 recent years with the largest selling rate in the region when calculated based on capitalization or total value held by foreign investors.

There are still many other positive factors.

From a more optimistic perspective, Mirae Asset Vietnam Securities believes that the Vietnamese stock market is in the right stage to accumulate investments at attractive valuations.

Market cycle analysis suggests that the stock market's bull run will continue, according to Mirae Asset Vietnam.

The analysis department of this foreign-invested securities company also pointed out that the attractive valuation of the market is determined based on two factors: low P/E valuation compared to the historical average and the profit growth prospects of listed enterprises.

"Notably, the difficulties the market faced in 2024 will be resolved in 2025," said an expert from Mirae Asset Vietnam Securities.

Meanwhile, monetary policy is expected to remain flexible, supporting the achievement of economic growth targets.

However, Mirae Asset Securities Vietnam does not deny that the main risk to this expectation is the devaluation pressure of the VND against the USD.

However, in terms of the economic context, the Government sets an ambitious target of maintaining high economic growth for the 2025 - 2030 period.

The government is also actively proposing goals and solutions to develop the Vietnamese stock market, enhancing Vietnam's international position in attracting indirect investment capital flows, Mirae Asset experts said.

Source: https://tuoitre.vn/dong-tien-vao-chung-khoan-can-day-3-nam-nghi-tet-som-hay-chuyen-gi-20250110123859507.htm