Mr. Johan Nyvene, Chairman of the Board of Directors of Ho Chi Minh City Securities Company (HSC), shared his insights at the 2024 Business Forum organized by Forbes Vietnam in Ho Chi Minh City on August 22nd.
The VN-Index closed the trading session on the same day at 1,282.78 points, a slight decrease of 1.27 points from the previous session. Meanwhile, the HNX Index and the Upcom Index witnessed modest gains, with the former increasing by 0.05 points to 238.47, and the latter inching up by 0.01 points to 94.49.
With the close hovering near the reference price, the VN-Index snapped its four-day winning streak and experienced volatility in the 1,280 – 1,300 point resistance zone. Market liquidity unexpectedly dropped compared to previous sessions, as the trading value on the HOSE floor barely exceeded 15,600 points.
A downside factor was the net selling by foreign investors. During the recent consecutive gains in the VN-Index, foreign investors persistently net sold, and on this day, they offloaded over VND 472 billion, focusing on stocks such as HPG, HSG, VPB, and HDB.
From the beginning of 2024 until now, foreign investors have engaged in the most prolonged net selling streak in recent years, with a total net selling value of over VND 61,000 billion.
Speakers at the 2024 Business Forum
However, Mr. Johan Nyvene shared at the forum that the net selling by foreign investors occurred amidst high-interest rates in the US and the return of capital to that market. Nonetheless, foreign investors currently hold a minuscule proportion of the Vietnamese stock market. The trading value of the VN-Index hovers around $700 million to $1 billion, occasionally reaching a peak of $2 billion, with foreign investors accounting for approximately 10% of the total trading value.
“The net selling by foreign investors, or even the efforts to upgrade the market, integrate it into the KRX system, and the potential US interest rate cuts are just ‘flavors’ for the stock market. The two factors that will drive the market’s long-term development are its connection to all sectors of the economy and the dominance of individual investors, who account for 90% of the market. If we look at liquidity, 3-4 years ago, the liquidity of the VN-Index was only about $200-300 million, but in the last two years, it has tripled or more, indicating relatively sustainable growth,” analyzed the Chairman of HSC.
Many experts anticipate that foreign investors will cease their net selling and that investment capital will return to emerging markets, including Vietnam, when the US embarks on an interest rate cut trajectory.
VN-Index fluctuates in the 1,280 – 1,300 point range
Ms. Michele Wee, CEO of Standard Chartered Bank Vietnam, predicted that in the fourth quarter of 2024, the US Federal Reserve (Fed) would begin cutting interest rates by a total of about 0.75 percentage points. In 2025, the interest rate cut trajectory is expected to continue, with a further reduction of about 1.25 percentage points, bringing US interest rates back to around 3%.
“If the trajectory unfolds as analysts predict, investment capital will flow back to emerging markets, including Vietnam. This will provide the State Bank of Vietnam with more room to maneuver in terms of interest rate policy, but it will also need to monitor inflation dynamics,” said Ms. Michele Wee.
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Bank stocks sold off heavily
Today (2/2), the VN-Index continues to rise, but in a cautious trading atmosphere. It is noteworthy that most banking stocks in the VN30 basket are facing strong selling pressure.
