Having participated in the stock market for more than 3 years, Mr. Khanh Minh (living in District 10, Ho Chi Minh City) often chooses stocks with good fundamentals to hold for the long term. One of the criteria he refers to for investment is observing the movements of foreign investors. "Seeing foreign investors net selling since the beginning of the year, I am also worried because the list of stocks are all from large enterprises with good business results" - he wondered.
Putting pressure on VN-Index
Statistics show that in the first half of 2024, foreign investors net sold more than 2 billion USD (more than 50,000 billion VND) worth of shares on the Vietnamese stock market. In the last trading week alone (from July 8 to 12), this group continued to net sell nearly 4,500 billion VND, in which the focus fell on FPT with a net selling value of 1,334 billion VND. Next were the 2 codes MWG and VHM, sold 551 billion VND and 467 billion VND respectively.
Experts believe that the net selling pressure of foreign investors over the past time is one of the biggest obstacles preventing the VN-Index from surpassing the 1,300-point mark. Mr. Nguyen Quang Hung, senior economist of Dragon Capital Fund Management Company, said that there are many reasons why foreign investors have reduced their proportion in the Vietnamese stock market.
"Global economic and political instability and concerns about monetary policies of major powers, typically the US, have strongly impacted foreign investment flows, increasing net selling pressure on stocks. In addition, since the beginning of the year, the VN-Index has had a performance of over 16%, ranking among the top 5 best-performing indices in Asia.
It is understandable and reasonable for foreign investors to take profits to preserve profits. It can be clearly seen that out of nearly 2 billion USD of net selling, nearly 20% focused on strong growth stocks such as FPT and Diamond ETF" - Mr. Hung cited.
The continuous net selling of stocks by foreign investors affects the sentiment of domestic investors and the growth of the Vietnamese stock market. Photo: HOANG TRIEU
According to Mr. Dinh Duc Minh, Investment Director - VinaCapital Investment Fund, the rise of stocks in the field of artificial intelligence (AI) and semiconductors has partly attracted foreign capital to the US. In addition, money has also flowed to the stock markets of Taiwan (China) and South Korea - places with many investment opportunities in the field of semiconductor technology and AI. Foreign investors' net selling of stocks is not only happening in Vietnam but also in most other emerging markets.
Investing in frontier markets is becoming less attractive to foreign investors, while US stocks continue to record impressive gains. This is reflected in the dissolution of the Ishares Frontier and Select EM ETF and the liquidation of more than $100 million in Vietnamese stocks in June.
Domestic investors "weigh it all"
Dragon Capital experts commented that the net selling of shares from foreign investors has been putting pressure on the VN-Index.
However, the amount of foreign stocks sold was absorbed by domestic investors, not affecting the growth momentum of the market too much. In fact, in some trading sessions, when foreign investors withdrew capital more than usual, the market fluctuated strongly but then the fall was stopped, stock prices and indices quickly found a balance and reversed upward.
Mr. Phan Dung Khanh, Director of Investment Consulting - Maybank Securities Company, commented that the foreign investors' actions did not have too much impact on the Vietnamese stock market, mainly psychological. In the period 2010-2019, foreign investors' transactions accounted for 20% of the total market, but now it is less than 10%, so the impact is not too strong. Individual investors currently account for a large proportion of the market, so the net selling pressure of foreign investors is "balanced" by domestic investors.
According to experts, it is difficult to predict exactly when foreign investors will stop net selling stocks. However, this pressure may ease when the US Federal Reserve (FED) signals a possible interest rate cut or the prospect of upgrading Vietnam's stock market becomes clearer.
Regarding the prospect of upgrading Vietnam's stock market, Mr. Nguyen Quang Hung said that if we can handle the issue of prefunding for foreign investors and meet the criteria for upgrading by 2025 as set out, foreign investors will certainly reconsider. The important thing is that the economy and listed companies' profits are recovering, the market will have a more attractive valuation by the end of the year. This is the right time to invest long-term in the Vietnamese market.
"The portfolio of stocks that VinaCapital monitors accounts for about 90% of market capitalization. The forecasted total annual profit growth of these businesses could reach about 20%. Although the stock market can still be affected by exchange rates and interest rates, this pressure will decrease in the coming time," said Mr. Dinh Duc Minh.
According to the July 2024 macro strategy report, SSI Securities Company (SSI Research) reported that in the second quarter, foreign investors increased net selling across the board, bringing the total net withdrawal value in the first half of the year to nearly VND 47,000 billion - more than double the net selling value in 2023. Including negotiated transactions, the net withdrawal value was more than VND 52,000 billion (more than USD 2 billion).
In the second quarter of 2024, foreign investors focused on net selling stocks of banking, residential real estate, food and beverage, financial services, and information technology. Stocks of retail, auto parts, and industrial real estate were net bought...
"Currently, the contribution to the total transaction value of foreign investors is about 9.6%. Meanwhile, domestic individual investors are still trading actively in the context of low deposit interest rates and good absorption of foreign supply" - SSI Research experts analyzed.
Source: https://nld.com.vn/khoi-ngoai-miet-mai-ban-rong-co-phieu-dang-lo-19624071420342571.htm
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