Mr. Nguyen Quang Thuan, Chairman of FiinGroup
The story of foreign investors' fierce net selling was hotly discussed at the July Dialogue with the topic "Upgrading, calling for capital and developing institutional investors" organized by the Securities Journalists Club on July 19.
Why are foreign investors selling so strongly?
Mr. Nguyen Quang Thuan, chairman of FiinGroup, said that after discussing with partners, he understood some of the main reasons why foreign investors are selling strongly in the Vietnamese stock market.
First, foreign investors are reallocating assets and withdrawing from some markets as the Fed continues to maintain high interest rates. They do not expect the Fed to cut interest rates, because while they increase quickly, they usually decrease slowly, Mr. Thuan said.
Second, foreign investors realize profits in the context of risks in Vietnam's exchange rate. Many stocks they invested in have made profits of up to several dozen percent, so realizing profits in the current context is also necessary.
Third, many investors are still concerned about the Vietnamese stock market with risk factors taken into account, such as the quality of bank assets, the prospects of the real estate market...
Mr. Thuan emphasized that upgrading to welcome new capital flows and new investors is important, but retaining investors is equally necessary.
From the perspective of a large and earliest investment fund in the stock market, Mr. Dominic Scriven, Chairman of Dragon Capital, said that in the past 4 years, foreign investors have sold a net 4 billion USD in the Vietnamese stock market. Of this, about 2 billion USD was in the first half of this year alone.
Mr. Dominic Scriven said that apart from objective factors such as the US interest rate hike, the Vietnamese market does not have many new and interesting factors to attract the attention of foreign investors.
Going into more detail, Dragon Capital's chairman said that the fact that Vietnam's market has not been upgraded has affected the decisions of many foreign investors.
When introducing to partners, expecting them to invest in Vietnam, we have to prepare an introduction but it is very difficult to convince. Not to mention that in the past two years, there have been some events that have affected their perception of risk.
No more 8 million, just 6 million accounts but half are organizations
Regarding exchange rates, Ms. Nguyen Linh Phuong - Deputy Director of the Monetary Policy Department, State Bank - admitted that 2024 is a difficult year when the Fed maintains high and prolonged interest rates.
After several delays, recent reports suggest the Fed could cut interest rates in September, but that's not certain.
Meanwhile, the State Bank continuously reduced interest rates to support the economy, leading to the gap between VND and USD interest rates remaining at a high negative level, greatly affecting the exchange rate.
Ms. Phuong also said that since April, the system has sold a large amount of foreign currency. The exchange rate during this period has not fluctuated significantly compared to other countries in the region. Compared to the end of last year, the exchange rate has only increased by about 4%, which is an appropriate decrease.
According to Ms. Phuong, the State Bank is still making efforts to synchronously implement many solutions to ensure the smooth operation of the monetary and foreign exchange markets, and ensure that exchange rates and interest rates develop appropriately. She hopes that the market's difficulties will soon end, Ms. Phuong said.
Mr. Nguyen Duc Chi - Deputy Minister of Finance
At the forum, Mr. Nguyen Duc Chi - Deputy Minister of Finance - also expressed concern that the number of foreign investors accounts for a very small proportion of the total market structure.
The number of investors opening accounts to invest in securities is up to nearly 8 million. However, the number of institutional investor accounts is very modest, about 14%.
To develop and increase the number of institutional investors, including foreign institutional investors, in the Vietnamese stock market, Mr. Chi emphasized that there are many things that need to be done.
For example, changing the awareness and psychology of Vietnamese investors when everyone likes to manage their own assets and trade by themselves. Meanwhile, capacity, awareness level, crowd psychology... are issues worth discussing.
"If there is a professional organization, it is not necessary to have 8 million securities accounts, but only 5-6 million, but half of them are institutional investors, which would be reasonable," said Mr. Chi.
Source: https://tuoitre.vn/khoi-ngoai-ban-rong-4-ti-usd-quy-tay-to-o-viet-nam-noi-ve-ly-do-20240719141824588.htm
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