Many factors support foreign investors to return to the market

Although foreign investors continued to have another year of strong net selling, even setting a new record, the bright spot from foreign investment capital flows and the participation of this group in the primary market still proved the attractiveness of the Vietnamese stock market.

Vietnam Stock Market 2025: Many factors support foreign investors to return to the market

Although foreign investors continued to have another year of strong net selling, even setting a new record, the bright spot from foreign investment capital flows and the participation of this group in the primary market still proved the attractiveness of the Vietnamese stock market.

Unwanted record of Vietnamese stocks

In recent months, the price movement of VNM shares of Vietnam Dairy Products Joint Stock Company (Vinamilk) has been quite similar to the net buying and selling rhythm of foreign investors. In most sessions of net selling by foreign investors, VNM shares rarely remained green at the end of the session and vice versa.

In 2024, foreign investors net sold VNM shares and earned approximately VND 3,150 billion. Although VNM ranked last in the top 10 stocks sold most by foreign investors in 2024, the selling action of foreign investors was part of the reason for the decline in the stock price of the "giant" in the dairy industry, in addition to a number of other factors such as growth, quarterly business results reports...

“Domestic cash flow is not too favorable to this stock. Therefore, when there is a lack of domestic cash flow, foreign investors' actions become the decisive factor in VNM's stock price movements,” Mr. Nguyen Duc Khang, Head of Analysis at Pinetree Securities Company, shared with investors when commenting on VNM stock transactions in recent months.

However, not all stocks were affected similarly. Foreign investors “took profits” of up to VND6,400 billion, but FPT stocks still brought good performance to investors last year (+82%). Not to mention, owning FPT is also the reason why many investment funds “won” the market.

For most stocks on the stock exchange, the proportion of foreign investors trading is not large. This figure may increase during sessions with low liquidity. However, statistics on HoSE show that on average since the beginning of the year, foreign investors account for 9.14% of the purchase transaction value and 10.9% of the sale transaction value.

Meanwhile, in the period before 2016, foreign investors could contribute about 20% of liquidity. However, the fact that foreign investors withdrew large amounts of capital at many times was still pointed out as the cause of affecting investor sentiment in the entire market.

Updated as of December 27, the net selling value of foreign investors reached more than VND95,000 billion, equivalent to USD3.7 billion. This is a record level in the 24 years of operation of the Vietnamese stock market. Of which, the top 10 stocks with the strongest net selling brought VND94,680 billion to foreign investors, led by shares of Vinhomes (VND19,100 billion), VIB (VND8,264 billion), FUEVFVND fund certificates (VND7,215 billion), FPT (VND6,390 billion), Masan (nearly VND6,030 billion).

Meanwhile, the stock that foreign investors bought the most on the floor was BHI stock of Saigon - Hanoi Insurance Corporation with a value of just over VND 1,600 billion through the transaction of DB Insurance buying 75% of charter capital.

Despite the "sad" record, the VN-Index mostly moved sideways within a narrow range of 1,200-1,300 points, with many failures in conquering the 1,300-point milestone, although it came close 5-6 times, but also built a fairly solid support level at the 1,200-point milestone.

It's hard to go against the flow when money flows to the US.

According to Mr. Tran Hoang Son, Director of Market Strategy at VPBank Securities Company (VPBankS), the net withdrawal of foreign capital from Vietnam and a series of emerging and frontier markets is due to the trend of global capital flows. Monetary policies of central banks, especially the US Federal Reserve (Fed), have changed from tightening to loosening. In each Fed interest rate cut cycle, if there is no economic recession, the S&P 500 index usually increases significantly.

We expect the next wave to be a market upgrade wave in the second half of 2025 after the accumulation period of the past year. The trough may fall in April-June. In the second half of the year, the VN-Index may reach a peak of 1,400 points.

- Mr. Tran Hoang Son, Director of Market Strategy, VPBankS Research

Many other asset classes such as gold and digital currencies have also attracted large capital flows. Mr. Son said that the cash flow from ETF funds pouring into the US stock market in 2024 reached a 10-year record, with a value of more than 1,000 billion USD.

Despite the sharp withdrawal of indirect capital, there are still positive signs of foreign capital in Vietnam. According to the Ministry of Planning and Investment, in the first 11 months of 2024, realized foreign direct investment (FDI) reached 21.7 billion USD, up 7.1% over the same period last year, while registered FDI reached 31.4 billion USD.

Notably, major projects such as NVIDIA’s AI research and development center in Hanoi and the $200 million investment in an AI factory in cooperation with FPT further strengthen the long-term FDI prospects, laying the foundation for the development of high-tech industries, especially semiconductors and artificial intelligence.

Along with that, despite net withdrawals on the stock exchange, foreign investors still have an active presence in the primary market when spending more than tens of thousands of billion VND to participate in issuances. Of which, two international private equity funds Bain Capital spent 6,339 billion VND to buy 74.6 million dividend-preferred shares with the right to convert into common shares of Masan Group (MSN). Four foreign shareholders of Phu Hung Securities Company participated in the private issuance of 50 million shares, thereby owning a total of 76.36% of the capital of this securities company.

PYN Elite Fund, an investment fund from Finland, was also very active in buying shares in the primary market when participating in the initial public offering (IPO) and becoming the second largest shareholder of DNSE Securities Company at the beginning of the year. This is also the most notable IPO deal in Vietnam in 2024.

Next, PYN Elite Fund was the investor who disbursed the largest amount of money in the private offering of Vietcap Securities Company (over 600 billion VND). According to the report sent to the fund's investors, in addition to increasing investment in the financial sector, during the year, PYN Elite also closed profits on shares of CMC Group (CMG) and HDBank (HDB) with impressive profit performance when the stock prices increased by 223% and 60% respectively.

The portfolio restructuring move also partly shows the shift of foreign capital flows when allocating to investments to optimize profits. The excitement of other channels such as FDI or equity issuance shows that Vietnam is still an attractive destination thanks to its long-term potential and policy reforms to support the market.

Future of foreign capital flow when there are many support policies

Assessing the prospects for 2025, Dr. Ho Sy Hoa, Director of Research and Investment Consulting at DNSE Securities Company, pointed out three factors that could support foreign investors to return to the market after two years of continuous selling. These factors include attractive valuations, growth forecasts of businesses and industries, and the process of upgrading the market.

According to experts from DNSE Securities Company, Vietnam's P/E is at 12 times, which is relatively attractive. Meanwhile, the US market, although foreign investors are oriented towards developed markets, but looking at the S&P500 valuation at 23 times, is no longer very attractive.

According to Mr. Nguyen Viet Duc, Director of Digital Business at VPBank Securities Joint Stock Company, the US stock market falling into a correction after overheating is a scenario that needs to be considered, and may not happen in the first half of 2025, but in the second half of the year. In the case of a 7-10% correction in US stocks, this will be an opportunity for frontier and emerging markets to welcome capital flows back. However, when the correction is too deep, from 10 to 20%, possibly due to other internal reasons, we must be careful.

In fact, in 2024, the profits of listed enterprises are estimated to recover very well with a growth of 18%, thereby bringing market valuations to a more attractive level. The high economic growth target set for 2025 with a planned level of 6.5-7.0% and a target of 7.0-7.5% will continue to promote growth of each enterprise, especially through accelerating the disbursement of public investment capital.

According to Mr. Petri Deryng, head of Pyn Elite Fund, the focus of the Vietnamese stock market in the coming time will be on the story of strong profit growth of listed companies. With the trend of maintaining growth and profit forecast for 2025, Mr. Petri Deryng predicts that the P/E ratio for the Vietnamese stock market will decrease to 10.1 times.

Along with internal factors, the market story in 2025 is also supported by positive movements in policy changes to welcome foreign capital, meet FTSE's market upgrade requirements and also to strengthen market confidence.

Circular No. 68/2024/TT-BTC removes the bottleneck related to foreign institutional investors being able to purchase shares without requiring sufficient funds (Non Pre-funding solution - NPS) and officially provides a roadmap for information disclosure in English, issued in early November 2024.

Next, the National Assembly voted to pass the Law amending and supplementing a number of articles of 9 laws, including the Securities Law. And less than 10 days later, the Draft amending Decree 155/2020/ND-CP detailing the implementation of a number of articles of the Securities Law with many important contents was announced by the Ministry of Finance and is seeking comments.

By determining the maximum foreign ownership ratio in an enterprise, the Draft is expected to not allow enterprises to arbitrarily lock foreign room, but only allow other foreign room levels when the competent state agency decides. This change aims to ensure the rights of foreign shareholders and reduce risks when unpredictable changes from the enterprise.

From the management agency side, Mr. To Tran Hoa, Deputy Director of the Market Development Department (State Securities Commission) also emphasized a current issue of not clarifying the list of industries accessible to foreign investors. This is a story that requires many ministries and sectors to coordinate and clarify to significantly improve the experience of foreign investors in Vietnam.

September 2025 is expected by experts to be the milestone when FTSE upgrades Vietnam's market. Mr. Tran Hoang Son, Director of Market Strategy at VPBankS Research, believes that this will be an investment highlight in the second half of 2025.

VNM - a stock that is not being positively affected by foreign investors' moves is listed among the stocks that can attract cash flow in the story of upgrading to an emerging market. According to SSI Research, enterprise stocks with a capitalization of billions of USD and early focus on governance quality, early response to information disclosure in English such as Vinamilk, Vinhomes, Vingroup, Hoa Phat... will benefit from foreign capital flow when this boost appears.

Source: https://baodautu.vn/chung-khoan-viet-nam-2025-nhieu-yeu-to-ho-tro-khoi-ngoai-tro-lai-thi-truong-d237525.html