Foreign investors withdraw a record net of nearly 1 billion USD in 2023

Closing the last trading week of 2023, after 8 consecutive weeks of strong net selling, foreign capital returned to the market with a net buying value of more than 300 billion VND.

However, if we look back over the past year, the negative point of the stock market may come from foreign investors when they accelerated capital withdrawal in the final period of the year.

In particular, statistics on the HOSE floor according to data from the Ho Chi Minh City Stock Exchange, in the 12 months of 2023, foreign investors net sold more than 985.8 million shares, equivalent to a net withdrawal of VND 24,830.9 billion (about USD 1 billion). Previously, in 2022, foreign investors net bought VND 26,674 billion on the HOSE floor.

Of which, foreign investors only had two months of net buying: January 2023, net buying 3,797 billion VND and March 2023, net buying 2,759 billion VND.

On the contrary, foreign investors increased net selling in the second half of 2023, with a peak of net selling of VND 9,969 billion on the HOSE floor in December, with strong net selling momentum in the last 5 months of 2023.

According to observations, in the period of late 2022 - early 2023, foreign investors increased disbursement when the market experienced a deep correction from the 1,200 point area to the area below 900 points.

The continuous net selling in the last 2 quarters III and IV is believed to come from the usual short-term profit-taking activities of previously opened positions. In addition, foreign investors' net selling also comes from concerns about domestic risks such as pressure to repay bonds, declining corporate profits, etc.

In the context of the world macro still having many uncertainties such as concerns about global economic recession, increasing geopolitical tensions, foreign capital flows may continue to withdraw from risky asset classes and seek safer investment channels such as US government bonds and gold.

The continuous net selling by foreign investors will certainly have negative impacts on the psychology of individual investors in particular and the stock market in general.

In fact, the net withdrawal of foreign capital not only occurred in Vietnam but also occurred similarly in countries in the region.

In particular, the net withdrawal pressure of the Southeast Asian region occurred when interest rates in developed countries, especially the US, maintained high interest rates for a longer period of time, which led to capital flows tending to return to developed countries and withdraw from frontier and emerging countries.

According to Dr. Nguyen Duy Phuong, Investment Director of DG Capital, net selling is a familiar story of foreign investors this year.

Even in November, when the market was growing very well, foreign investors were also net sellers of more than VND 3,500 billion. Thus, we can see that the impact of foreign capital flow is there, but we do not need to worry too much about it being able to cause the market to reverse its trend.

Foreign investors are also market participants and their actions are influenced by many factors. For example, at the end of last year, 2022, when the VN-Index fell sharply, foreign investors bought a lot. This year, when the market was basically recovering, foreign investors sold.

The fact that cash flow has still absorbed net selling pressure from foreign investors well in recent times shows that investor sentiment has become more stable and is not as dependent on foreign investors' actions as in the previous period.

Dr. Nguyen Duy Phuong - Investment Director of DG Capital made a forecast: Regarding the trend, foreign investors may soon return to net buying in early January 2024 after they have completed their portfolio restructuring and the principle is not to keep a high proportion of cash in the portfolio for a long time.

Source