Exchange rate and the story of goods shortage

It is estimated that since the beginning of the year, foreign investors have sold a net VND85,000 billion on HoSE, a record since the operation of the Vietnamese stock market. The main factors are believed to be exchange rate pressure and lack of new quality goods.

Foreign investors' record net selling of VND85,000 billion: Exchange rate and the story of goods shortage

It is estimated that since the beginning of the year, foreign investors have sold a net VND85,000 billion on HoSE, a record since the operation of the Vietnamese stock market. The main factors are believed to be exchange rate pressure and lack of new quality goods.

Continuously for about 20 months, foreign investors only stopped net selling in January 2024 and have net sold more than VND 85,000 billion on the Ho Chi Minh City Stock Exchange (HoSE) since the beginning of the year.

In the session of November 19 alone, on the HoSE floor, this group net sold up to 1,658 billion VND, the most sold were VHM - 342 billion VND, FPT - 239 billion VND, HDB - 208 billion VND... The strong selling pressure from foreign countries, while domestic cash flow was cautious, caused the index to continue to be under pressure, falling 11.97 points, back to 1,205 points. Liquidity on HoSE returned to a low level, only 13,200 billion VND.

The main factors that experts believe are the exchange rate and lack of new quality goods have prevented the Vietnamese market from retaining foreign capital in the market.

Regarding the exchange rate issue, the depreciation of VND against USD affects the performance of foreign funds, limiting the ability to attract capital. This trend is forecast to continue.

Dragon Capital’s latest report shows that total USD deposits in the Vietnamese banking system are about 39.5 billion USD, down from 42 billion USD in 2022. Foreign exchange reserves also decreased by more than 20 billion USD from a peak of 110 billion USD. At the same time, the upcoming maturity of 1.1 billion USD worth of international bonds, along with businesses and people increasing their holdings of USD, have created short-term pressure.

KIM’s latest report also said that Donald Trump’s pro-growth policies will strengthen the USD, putting great pressure on VND. At the same time, the speed and extent of Fed interest rate cuts may be limited by Donald Trump’s proposals, and this scenario may limit Vietnam’s ability to continue to reduce interest rates.

The longer-term and more fundamental story is that the Vietnamese stock market lacks new quality products for IPO and listing on the stock exchange.

It has been noted that in recent years, there have been very few "new faces" in the market, partly because the IPO/listing approval process is more stringent, partly because the gloomy market is not convenient for offering; in addition, the IPO roadmap of large-scale, effective State-owned enterprises is still very limited.

The reality recorded on the stock market shows that many good businesses, after IPO/listing, are well received by the market; the most recent period can be mentioned as Viettel stocks such as VTP currently display a 3-digit price, recording an impressive price; similarly, CTR also joined the club with the highest market price on the stock exchange...

At the Listed Enterprise Awards Ceremony, an event within the framework of the 2024 Listed Enterprise Conference held last weekend, Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission, said that Vietnam's economy is an open economy, with total import-export value reaching over 160% of GDP. However, what about our market? Although this year the absolute number of foreign investors' ownership ratio in the Vietnamese market remained at around 47 billion USD, in relative terms, foreign investors only hold about 16% of the total market capitalization.

"Compared to neighboring countries, this rate is very low, and compared to the openness of Vietnam's economy, this number is relatively small," Mr. Hai assessed.

According to Mr. Hai, to attract foreign investors, the Government has revised the procedures and regulations such as Circular 68... "However, on the other hand, when foreign investors enter the market, we need goods. The first problem is the ownership ratio of foreign investors, the ownership ratio in many enterprises for foreign investors is zero, so foreign investors cannot participate," said Mr. Hai.

Source: https://baodautu.vn/ky-luc-ban-rong-85000-ty-dong-cua-khoi-ngoai-ty-gia-va-cau-chuyen-thieu-hang-hoa-d230454.html