Investment funds are prioritizing opportunities in sectors that are resilient or can go counter-cyclical.
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| The renewable energy and technology sector in Vietnam is being monitored and considered for investment by investment funds. |
Need new factors to attract cash flow
All indicators show that the cash flow into Southeast Asian ETFs (exchange-traded funds) continues to be net withdrawn. SSI Research analysts maintain a cautious view on the capital flow into Vietnam’s ETFs in the coming time. However, the intensity of net withdrawal will be more limited than in the second quarter.
“Positive signals may begin to appear when the macro environment (exchange rate and interest rate) or politics become more stable. In particular, Vietnam may benefit when the trend of profit-taking and seeking other investment opportunities appears in the Taiwanese market,” SSI Research commented.
In July, ETFs continued to withdraw capital with a total volume of VND 2,330 billion, accounting for 3.5% of total assets. Since the beginning of the year, ETFs have withdrawn a total of VND 18,500 billion, equivalent to 24.4% of total assets by the end of 2023, bringing the total assets of ETFs to only VND 59,900 billion.
Overall, after a volatile July (especially towards the end of the month), equity fund flows are likely to be more cautious in August as they assess the risk of a recession in the US market.
According to FiinGroup statistics, foreign investors currently own about 14% of the Vietnamese stock market. On HOSE alone, this ratio is 17.3%, HNX is 5.4% and UPCoM is 3%. At the end of 2023, the foreign ownership ratio will be 19.83% (HOSE), 10.99% (HNX) and 4.24% (UPCoM), respectively.
SSI Research continues to have a cautious view when in early June, Blackrock Asset Management Group announced the dissolution of the iShares Frontier Fund in Vietnam.
The iShares Frontier fund has a size of 425 million USD. Of which, Vietnamese stocks account for the highest proportion, reaching 28%. According to data from BSC Research, immediately after the announcement, from June 7 to June 18, this fund sharply reduced the proportion of Vietnamese stocks from 28% to 13.77%, equivalent to the remaining value of about 50.22 million USD (about 1,256 billion VND).
Foreign investment funds and foreign investors are an important component of the system of institutional investors in the Vietnamese stock market. However, this group has been net sellers continuously since 2023. Since the beginning of 2024 alone, foreign investors have net sold 2 billion USD. If calculated from 2023, this group has net sold about 4 billion USD.
According to Mr. Nguyen Quang Thuan, Chairman of FiinGroup, foreign investors are net sellers partly because foreign investors are reallocating assets and withdrawing from emerging markets because they do not expect the US Federal Reserve (Fed) to reduce interest rates.
Meanwhile, Mr. Dominic Scriven, Chairman of Dragon Capital, said that partly because Vietnam has not been upgraded, there are no new attractive factors.
Flexible risk allocation
Along with the process of divesting state capital in many enterprises, there is still a lot of room to attract more domestic and foreign institutional investors. Investment funds are also flexible and adaptable in all circumstances.
According to a representative of VinaCapital, the fund closely monitors macroeconomic indicators and geopolitical developments to adjust its investment strategy. VinaCapital also prioritizes taking advantage of opportunities in sectors that are resilient or can go counter-cyclical.
A positive point in July was that the Ministry of Finance announced a draft circular allowing foreign institutional investors to conduct margin trading within T+2 with support from securities companies. It is expected that this circular will be issued in the fourth quarter of 2024, creating conditions for foreign investment funds to consider disbursing back to the Vietnamese market.
At the moment, the potential in the renewable energy and technology sectors is being closely watched by investment experts at the fund. These are sectors that are less affected by traditional economic cycles and at the same time offer growth opportunities in a constantly changing global context.
“Vietnam is on the list of investors around the world thanks to its very attractive prospects and advantages,” a representative of VinaCapital affirmed.
Accordingly, he expects that when the Vietnamese stock market is upgraded to emerging market status, there will be an additional 25 billion USD of new foreign capital poured into Vietnamese stocks by 2030. Few countries are better positioned than Vietnam to maintain growth in the near future.
Despite its attractiveness, Vietnam is not outside the context of global fluctuations. Accordingly, risk management is a fundamental part of VinaCapital's investment strategy in the coming time.
VinaCapital has developed a multi-layered process that involves identifying, assessing and mitigating risks at every stage of the investment process. This process begins with a thorough due diligence of potential investments, including financial analysis, market assessment, scenario planning, ongoing monitoring and adjusting positions as necessary. Diversification is a core element of VinaCapital’s risk management strategy, ensuring that capital is distributed across different sectors and asset classes.
In addition, Mr. Alex Hambly, a member of VinaCapital's Investment Council, places special emphasis on the use of technology and data analysis to develop investment strategies. It is known that VinaCapital has invested in advanced data analysis platforms, allowing the collection and analysis of large amounts of market data in real time. This helps the fund make informed investment decisions, as well as identify trends and opportunities that may not be visible through traditional analysis.
Source: https://baodautu.vn/quy-dau-tu-tim-co-hoi-tang-truong-moi-d222524.html
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