On July 19, at the annual July Dialogue forum with the theme "Upgrading, calling for capital and developing institutional investors", organized by the Securities Journalists Club in Hanoi, the issue of developing and increasing the number of institutional investors in the Vietnamese stock market was hotly discussed with a series of solutions proposed.
Foreign investors net sold 4 billion USD, why?
According to Deputy Minister of Finance Nguyen Duc Chi, if the stock market wants to achieve high quality and sustainable development, institutional investors must account for a large proportion of the investor structure. Up to now, investors have opened nearly 8 million accounts, with a very large market capitalization.
However, looking at the structure and accounts, the number of institutional investors is still modest, foreign investors own about 14% of the shares on the market (calculated by the number of outstanding shares - PV), the rest are mostly individual investors.
From the above reality, Mr. Nguyen Duc Chi emphasized the issue of how to increase institutional investors in the market. According to Deputy Minister Nguyen Duc Chi, the Ministry of Finance and the State Securities Commission (SSC) have recognized this task for a long time and have also reported to the Prime Minister to include it in the task of developing the stock market in the coming time.
The issue of strong foreign net selling was also mentioned at the forum with the expectation of a thorough understanding of the cause. According to Mr. Nguyen Quang Thuan, Chairman of FiinGroup, the reason is that recently foreign investors have reallocated assets and withdrawn from some markets in the context of the US Federal Reserve (FED) still anchoring high interest rates.
They do not expect the FED to cut interest rates, because interest rates usually increase quickly but decrease slowly. Along with that, 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," said Mr. Thuan.
Too many individual investors and a lack of institutional investors are among the factors that make the market unstable. Photo: HOANG TRIEU
According to this expert, many foreign investors are still concerned about risk factors, such as the quality of bank assets, real estate market prospects, exchange rates, etc.
Mr. Dominic Scriven, Chairman of Dragon Capital Fund Management Company, said that since the beginning of 2024 alone, foreign investors have net sold 2 billion USD, and if calculated from 2023, this group has net sold about 4 billion USD.
"If in the past foreign investors knew Vietnam had Hanoi and Ho Chi Minh City for tourism and business, recently they see that Vietnam does not have many new and interesting factors to attract attention, while many other markets have that" - Mr. Dominic Scriven said. However, he also recognized that there are many objective factors and risks affecting this and expected that this will not happen in the future.
Increase institutional investors
How to build a higher proportion of institutional investors is the current problem. According to the Chairwoman of the State Securities Commission Vu Thi Chan Phuong, individual investors accounting for more than 90% are one of the factors that make the market unstable, and investment is based on psychology. "To be stable, the proportion of institutional investors must account for 50%-60% like developed markets. The market has reached a certain size, like a person wearing a tight shirt, it needs to take a new step forward" - Ms. Phuong acknowledged.
According to Mr. Nguyen Quang Thuan, 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. Agreeing with this assessment, Deputy Minister Nguyen Duc Chi said that to increase the number of institutional investors, there is a lot of work to be done and it must be done synchronously, it cannot be done overnight. According to Mr. Chi, this must go hand in hand with the process of upgrading the stock market.
At the same time, the Ministry of Finance will create conditions and open up activities for various types of investment funds. In fact, foreign institutional investors still want to invest in the Vietnamese market and gain benefits from the market. The market also benefits when foreign investors participate. "We really want these two benefits to meet," Mr. Chi stated.
In addition, the Ministry of Finance also focuses on removing unnecessary conditions in management to make it easier for institutional investors to participate in the Vietnamese stock market. "Currently, the State Securities Commission has sought opinions on the issue of foreign investors not having to deposit 100%. This is an important issue towards upgrading the stock market," the Deputy Minister stated.
Chairwoman of the State Securities Commission Vu Thi Chan Phuong also said that along with the work of perfecting the legal framework and policies to attract foreign indirect investment (FII), solutions related to administrative procedures and creating conditions for foreign investors to participate in the stock market are always focused on and improved by the management agency. Thanks to that, the number of foreign investors participating in the domestic stock market is increasing; foreign investment capital is also increasingly present in enterprises with many different roles.
In addition, the State Securities Commission is also vigorously implementing solutions to meet the criteria of market rating organizations towards the goal of upgrading Vietnam's stock market from frontier to emerging.
This includes strengthening coordination with foreign institutional investors to answer questions, acknowledge and resolve their difficulties when investing in Vietnam; seeking support from foreign investors for the upgrade target. "The upgrade depends on the objective assessment of international rating organizations through the practical experience of foreign investors.
Therefore, under the direction of the Government and the Prime Minister, in addition to the best efforts of the management agencies, to bring about the expected results, the participation and determination of relevant ministries and branches are needed," the Chairman of the State Securities Commission emphasized.
In the trading session on July 19, VN-Index reversed and decreased by 9.66 points (0.76%) to 1,264.78 points after a previous increase. On the Hanoi Stock Exchange, HNX-Index also decreased by 1.97 points (0.81%) to 240.52 points.
The number of stocks with price reductions dominated both exchanges. Market liquidity slightly decreased compared to the previous session, only about 20,467 billion VND. Foreign investors returned to net selling nearly 350 billion VND, focusing on net selling of large stocks: FPT (over 228 billion VND), VHM (nearly 159 billion VND), TCB (nearly 105 billion VND), MSN (nearly 93 billion VND)...
Real estate stocks plummeted, as QCG shares of Quoc Cuong Gia Lai Company hit the floor and lost liquidity after news that Ms. Nguyen Thi Nhu Loan, General Director of this company, was prosecuted and temporarily detained.
Source: https://nld.com.vn/tang-tinh-on-dinh-cho-thi-truong-chung-khoan-196240719201113349.htm
Comment (0)