USD transactions at a bank in Ho Chi Minh City - Photo: QUANG DINH
In the first eight months of this year, due to the high USD interest rates in the world, foreign investors sold Vietnamese securities, net withdrawing nearly 65,000 billion VND (approximately 2.6 billion USD).
Stable exchange rate, investors worry less
According to Ms. Nguyen Thi Thuy Linh - Director of Analysis and Investment of An Binh Securities (ABS), when the US reduced USD interest rates, the trend of pouring capital into emerging markets returned. Foreign investors have been net buyers in Indonesia, Malaysia...
In Vietnam, although net selling has decreased gradually over the past month, there have been net buying sessions. In August, foreign investors only net sold VND3,600 billion, compared to the average VND8,300 billion in the first seven months of this year.
Mr. Truong Hien Phuong, senior director of KIS Vietnam Securities, said that recently, the VND interest rate has decreased sharply, while the VND/USD exchange rate has increased by 5%, leading to a decrease in investors' profitability, making it less attractive compared to other markets in Asia, so they have to withdraw capital from Vietnam.
Mr. Huynh Hoang Phuong, an expert from FIDT (a company specializing in investment consulting and asset management), said that foreign investors may resume net buying in the near future, but the value will not be too large and it will be difficult to recover the value sold at the beginning of the year if the Vietnamese stock market has not been officially upgraded.
Prepare to attract foreign capital
The Fed's move to lower interest rates after four years is expected to help international investment capital flow back to ASEAN stock markets, including Vietnam - Photo: QUANG DINH
According to experts, the level of foreign capital flowing into Vietnam depends on many factors, including interest rates and exchange rates. Statistics show that when the US reduces interest rates, capital will flow to emerging markets. In the short term, foreign investors will not be able to immediately buy large amounts of net volume, but they will gradually record more positive changes in the market.
Therefore, to attract foreign capital, the expert emphasized that more positive changes are needed from within. There needs to be good policies to support and promote business development, revive the economy after storms and floods, and economic growth recovery is an important foundation for Vietnam to attract foreign capital.
Mr. Huynh Hoang Phuong believes that in order to attract foreign capital, it is necessary to remove the bottlenecks and barriers that prevent them from accessing the market, and at the same time, have other attractive factors for "marketing". Recently, the Ministry of Finance issued a circular stipulating that foreign investors do not need to have enough money but can still buy stocks.
According to Mr. Phuong, this is a step closer for the Vietnamese stock market to meet the requirements for upgrading to an emerging market by FTSE Russell (an international rating organization - PV). When upgraded, it is estimated that capital from ETF funds could reach billions of USD, not counting capital flows from active funds. Therefore, continuing to remove obstacles and promote the process of upgrading the market is still an important strategy if we want to increase foreign capital flows in Vietnam.
New stock needed for the stock market
Looking back at the data, in 2017, foreign investors made a record net purchase in the history of the Vietnamese stock market with a value of more than 2 billion USD for stocks, bonds, and fund certificates - 8 times higher than the net purchase value in 2016.
Net purchases with large value continued in 2018 and 2019. Experts have pointed out that this is the result of simplifying investment records and procedures for foreign investors; promoting state capital divestment in enterprises with potential and good business results such as Sabeco, Vinamilk...
Mr. Ho Sy Hoa, director of research and investment consulting at DNSE Securities, said that if foreign investors' transactions from 2014 to 2016 only reached about 700 billion VND, then the peak in recent years sometimes reached 60,000 billion VND.
In addition to objective factors due to interest rate differences and exchange rate losses, Mr. Hoa acknowledged that in recent years, the number of initial public offerings (IPOs) and IPO capitalization values have both decreased. "Businesses planning to IPO are hesitant to enter the market due to volatile conditions," Mr. Hoa said.
According to Deloitte's IPO report 2023, in Vietnam, the downward trend in IPOs is attributed to the rising fuel prices, increasing tightness in the capital market, especially the corporate bond market which has not yet resolved many bottlenecks.
On the other hand, regulatory agencies advocate transparency of financial information and apply many international standards such as financial reporting standards. This has a short-term impact on reducing the number of listed companies.
The absence of new, quality goods is also one of the reasons why a representative of a foreign investment fund commented that the Vietnamese market "lacks something new and attractive."
On the contrary, Mr. Hoa also believes that financial standardization and transparency, although partly affecting quantity, are positive in the long term for the stock market in particular as well as the development of the capital market in general.
Statistics show that in the first eight months of this year, foreign investors net sold nearly VND65,000 billion (equivalent to USD2.6 billion) across the entire Vietnamese stock market. This figure is much higher than the net selling of USD111.8 million in the same period last year and surpasses the net selling value for the whole of 2021 (VND62,400 billion).
Source: https://tuoitre.vn/von-ngoai-tro-lai-chung-khoan-khi-nao-20240922104703265.htm
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