Has the “turning point” arrived after a long streak of net selling?
According to trading statistics from September 23-27, foreign investors withdrew nearly VND 550 billion from the Vietnamese stock market, with HOSE experiencing net selling of nearly VND 530 billion. However, the foreign block’s trading balance was actually affected by a sudden agreement to sell VIB shares during the September 24 session related to the divestment activities of Commonwealth Bank of Australia (CBA).
Excluding the exceptional case of VIB (-VND 2,665 billion), in reality, foreign capital has poured into the market more than VND 2,000 billion through matching orders.
Meanwhile, observing the activities of foreign capital in the past two weeks, foreign money has appeared in 8 out of 10 sessions. In total, during these two weeks, foreign investors net bought on the order matching system more than VND 3,000 billion.
Going deeper into the trading structure, the 5 stocks that were most bought by foreign investors in the past two weeks were SSI (+VND 831 billion), FPT (+VND 532 billion), TCB (+ 448 billion VND), TPB (+309.7 billion VND), and HCM (+281 billion VND), all of which benefited to some extent. In particular, TPB increased by 12% in the past two weeks, while SSI and TCB both increased by over 9%.
 Top net buying and selling of foreign investors in the 2-week period from 16-27/9.
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On the other hand, the 5 stocks that were heavily net sold were VIB (-VND 2,665 billion), HPG (-VND 474 billion), VPB (-VND 437.7 billion), VCG (-VND 164 billion), and VIX (-115.4 billion VND). None of these stocks experienced unfavorable developments. In fact, VIB and VPB both increased by over 7% in just two weeks of trading.
This indicates that domestic investment funds no longer hesitate to invest in stocks that are still under pressure from foreign funds. Meanwhile, the stocks in the positive direction are simultaneously benefiting “double” from both domestic and foreign capital inflows.
With net buying in 8 out of the last 10 sessions, the market may be showing signs of a “turning point” after the Fed officially reversed the cycle of tightening monetary policy.
Foreign investors actually net bought in September 2024 if the agreement on VIB is excluded.
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The picture of foreign investment activities will likely become clearer from October 2024, as September 2024 marks the eighth consecutive month of net selling in the Vietnamese stock market. However, the intensity of net selling since the beginning of September 2024 has narrowed to a low level in the selling chain, at around VND 1,600 billion.
The story of market upgrade is regaining its relevance.
For capital flows from ETF funds as well as active funds, the Fed’s rate cut is considered a positive factor supporting the reversal of the capital withdrawal trend.
In reality, even before the Fed reversed its monetary policy, selling pressure from foreign investors had weakened significantly as speculative fund outflows decreased.
Mr. Nguyen The Minh, Director of Individual Customer Analysis at Yuanta Vietnam Securities Company, said that the Fed’s 0.5% interest rate cut has created many positive effects, such as easing exchange rate pressure, which helps make the Vietnamese stock market more attractive in terms of valuation.
In particular, the issuance of Circular 68 by the Ministry of Finance will improve the trading frequency of foreign investors and will be the key to helping FTSE Russell upgrade the Vietnamese market to the Secondary Emerging Market group.
The effectiveness of the implementation for ETFs to officially add Vietnamese stocks to their portfolios can be expected in 2025. However, Mr. Minh believes that whether FTSE considers the upgrade in October 2024 or March 2025, it will have a positive impact on the market.
Investors expect the upgrade to the emerging market to attract about $1.5 billion in capital inflows from ETFs, excluding capital from active funds.
According to BVSC, the Vietnamese stock market will be considered for an upgrade in March 2025 at the earliest – after the final assessments of the “Transaction Failure Costs” criterion.
Source: BVSC.
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Currently, 7 out of 9 groups of criteria for upgrading from a frontier market to an emerging secondary market by FTSE have been met. The two criteria that Vietnam has not yet met are:
✓ The “Settlement Cycle (DvP)” criterion is assessed as “restrictive” because, currently, market practice requires checking to ensure sufficient funds before executing a transaction.
✓ The criterion “Payment – Costs related to failed transactions” is not assessed because, by default, there are no failed transactions in the market.
After the Ministry of Finance issued Circular 68, Vietnam has come closer to meeting these two criteria of FTSE. In the upcoming assessment on October 8, 2024, BVSC believes that FTSE will recognize more positive developments in Vietnam’s upgrade process.
