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 net from the Vietnamese stock market, with HOSE seeing nearly VND 530 billion in net selling. However, the actual foreign exchange trading balance was impacted 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, there have been 8 out of 10 sessions with the presence of foreign money. In total, over the two weeks, foreign investors bought a net of over VND 3,000 billion through matching orders.
Delving deeper into the trading structure, the 5 stocks that were most bought by foreign investors in the two weeks were SSI (+VND 831 billion), FPT (+VND 532 billion), TCB (+ VND 448 billion), TPB (+VND 309.7 billion), and HCM (+VND 281 billion), all of which benefited to some extent. Among them, TPB surged 12% in the two weeks, while SSI and TCB both rose over 9%.
 Top net buying and selling of foreign investors in the 2-week period from September 16-27.
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On the other hand, the 5 stocks that were heavily sold were VIB (-VND 2,665 billion), HPG (-VND 474 billion), VPB (- VND 437.7 billion), VCG (-VND 164 billion), and VIX (-VND 115.4 billion). None of these stocks experienced unfavorable developments. In fact, VIB and VPB both gained over 7% in just two weeks of trading.
This indicates that domestic funds are no longer hesitant about stocks that are still under pressure from foreign funds. Meanwhile, the positive codes are simultaneously benefiting from both domestic and foreign money inflows.
With 8 out of the last 10 sessions seeing net buying, the market may be witnessing a “turning point” after the Fed officially reversed its tight monetary policy cycle.
Foreign investors actually bought a net amount in September 2024 if the agreed sale of VIB is excluded.
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The picture of foreign investors’ activities may become clearer from October 2024, as September 2024 was 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 streak, at around VND 1,600 billion.
The story of market upgrade is regaining its relevance
For the capital flow from ETF funds as well as active funds, the Fed’s rate cut is considered a positive factor supporting the reversal of the net capital withdrawal trend.
In fact, even before the Fed reversed its monetary policy, the selling pressure from foreign investors had weakened significantly as the supply from speculative funds decreased.
Mr. Nguyen The Minh, Director of Individual Customer Analysis at Yuanta Vietnam Securities Company, said that the Fed’s rate cut of 0.5% has created many positive effects, such as easing exchange rate pressure, which helps create more attractive valuations for the Vietnamese stock market.
Especially, 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 seen 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 flow from ETFs, excluding the flow from active funds.
According to BVSC, the Vietnamese stock market will be considered for an upgrade at the earliest in March 2025 – after the final assessments on the “Trading 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 rated 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 rated because, by default, the market does not experience failed transactions.
After the Ministry of Finance issued Circular 68, Vietnam has moved 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.
