Has the “turning point” arrived after a long streak of net foreign 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 net selling of nearly VND 530 billion. However, the actual foreign trading balance was influenced by a sudden large-volume negotiated sale of VIB shares on September 24, related to the divestment of Commonwealth Bank of Australia (CBA).
Excluding the exceptional case of VIB (-VND 2,665 billion), in fact, foreign capital inflowed the market with more than VND 2,000 billion through matching orders.
Meanwhile, observing the activities of foreign capital in the past two weeks, foreign money appeared in 8 out of 10 trading sessions. In total, during these two weeks, foreign investors net bought more than VND 3,000 billion through matching orders.
Going deeper into the trading structure, the 5 stocks that were most net bought by foreign investors in the past two weeks were SSI (+VND 831 billion), FPT (+VND 532 billion), TCB (+ 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 two weeks, while SSI and TCB both increased by more than 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 (-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 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 from both domestic and foreign capital inflows.
With net buying in 8 out of the last 10 trading sessions, the market may be showing signs of a “turning point” after the Fed officially reversed its tight monetary policy cycle.
Foreign investors actually net bought in September 2024 if the negotiated trades of VIB are excluded.
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The picture of foreign investment activities will likely become clearer from October 2024, as September 2024 marked 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 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 fact, even before the Fed reversed its monetary policy, selling pressure from foreign investors had weakened significantly as speculative funds were no longer abundant.
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, making the Vietnamese stock market more attractive in terms of valuation.
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 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 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 on the “Failed Trade Costs” criterion.
Source: BVSC.
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Currently, 7 out of 9 groups of criteria for upgrading from a frontier market to a secondary emerging market by FTSE have been met. The two criteria that Vietnam has not yet met are:
✓ The “DvP Settlement Cycle” 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 set by FTSE. In the upcoming review on October 8, 2024, BVSC believes that FTSE will recognize the positive progress of Vietnam’s market upgrade process.
The VN-Index: A Fleeting Triumph Over 1,300 Points
As of mid-year, the VN-Index has repeatedly failed to conquer the 1,300-point threshold. This has had a notable impact on the short-term psychology of investors, causing a ripple of uncertainty and hesitation in the market.
The Foreign Buying Frenzy Continues: Massive Investments in Vietnam’s Stock Market
Foreign trading activities were positive, with a net buy of 2.3 trillion VND across the market.
