Record net selling year for foreign investors

According to statistics from the Ho Chi Minh City Stock Exchange (HoSE), foreign investors have poured more than 438,902 billion VND to buy stocks, bonds, fund certificates, ETFs and warrants in 2024. In the opposite direction , they sold nearly 529,090 billion VND.

Thus, foreign investors net sold more than 90,311 billion VND on HoSE, equivalent to more than 3.55 billion USD. If the entire stock market is counted, the number will exceed VND 93,000 billion. This is a record level in the history of the Vietnamese stock market.

Not only investors, the above record net selling data also exceeded the forecasts of a number of analysts and financial experts in the industry. Mr. Tran Hoang Son, Director of Market Strategy of VPBank Securities (VPBankS), said it was surprising that over the past 20 months, foreign investors only temporarily stopped releasing goods in January 2024. “Never before has the Vietnamese stock market recorded such a large net selling momentum from foreign investors,” he commented.

The interest rate difference between USD and VND, monetary policy, high exchange rates… have significantly impacted the actions of foreign investors in the past year. This causes capital flow restructuring activities globally, markets with weaker growth, more currency devaluation or frontier markets will have strong capital withdrawals to allocate to operating markets. more effective. Not only Vietnam, but other markets in the region are also clearly affected by this wave.

Data compiled by Yuanta Vietnam Securities also shows that the flows in markets around the region are quite similar to Vietnam. Even some countries such as Germany, Canada or Brazil also recorded the phenomenon of foreign investors net withdrawing in the past year. This proves that the strengthening of the USD has a great impact on frontier and emerging markets.

The pressure to release goods from foreign investors also increases and decreases each quarter. At the beginning of the year, they were still net buyers in January and then gradually reversed. Foreign investors boosted sales in the second quarter, then slightly decreased in the third quarter. At that time, the market predicted that when the US Federal Reserve (Fed) further reduced interest rates and Vietnam removed bottlenecks on margin trading, foreign investors would return. However, the reality is the exact opposite, the pressure soon returns at the end of the year.

Mr. Le Van Ha, Sales Director of Yuanta Vietnam Securities, said that forecasts of fewer interest rate cuts by the Fed and the unpredictability of President Donald Trump’s new term have pushed up the DXY dollar strength index. strengthens, so the pressure on exchange rates is still great. Meanwhile, due to margin bottlenecks, by December 2024, Vietnam will begin to cautiously apply pre-funding (buying securities without paying 100% in advance) for foreign investors and expects Now we will continue to improve other criteria. The above reasons mean that new capital flows into the market have not improved.

As for another reason, Mr. Ha believes that it may be because Vietnam has just recovered economically after a change in the bond market. Therefore, foreign investors have better options for cash flow to this channel.

The last time the market witnessed massive selling by foreign investors was in 2021. The total accumulated net selling value at that time exceeded VND 58,000 billion, but was only equal to about 64% of the annual discharge in 2024. Compared to previous periods, In the previous period, the large selling intensity of foreign investors often put pressure on the score, currently capital flows from individual investors are the main driving force. According to VPBankS statistics, domestic individual investors became an important support force with a net purchase of more than 81,000 billion VND, and domestic organizations net purchased more than 9,800 billion VND.

With a low interest rate environment, domestic individual investors still actively participate in the market and respond well to net selling pressure from foreign investors. This also positively affected the development of VN-Index as this index has been in a sideway up trend (both accumulating and increasing) since the beginning of the year and closed up more than 12%.

According to Mr. Nguyen Trieu Vinh, Deputy Director of Investment of Vietcombank Fund Management Company (VCBF), stocks still increased despite record net selling by foreign investors, showing the importance of the domestic investor group, mainly individuals. capital accounts for about 90% of the total transaction value of the entire market.

He said that interest rates in Vietnam remain low while macroeconomics and corporate profits move in a positive direction, these factors help the stock market maintain its attractiveness to many people. Recently, many securities companies, including those that are subsidiaries of banks, have also completed capital increases to finance margin lending activities.

Talking about the future, VCBF experts still believe that there are many reasons to expect indirect investment capital from foreign countries to return to Vietnam as the macroeconomics are stable, the economy is returning to a high growth trajectory; Corporate profits are expected to recover strongly this year; The prospect of securities being upgraded to emerging market status becomes clearer. Experts also emphasized the valuation of stocks at an attractive level with a forecast P/E ratio (market price to earnings per share) in 2025 of 10.3 times, significantly lower than the average level. average sales in the past 10 years (about 15.5 times) as well as many markets in the region.

Meanwhile, VPBankS experts said that in the first half of the year, the outlook for global investment capital flows is still not positive due to unclear expectations, on the contrary, there are many variables that are difficult to predict. Therefore, capital flows will continue to be attracted to developed markets when the interest rate difference compared to emerging markets is still large. However, looking at the further trend, it is likely that interest rates in major economies will decrease in the 2025-2026 period when inflation is controlled. Accordingly, capital flows may soon return to emerging and frontier markets, especially when valuations of developed markets like the US have become quite expensive.

For Vietnam, VPBankS forecasts that the net selling trend of foreign investors will still occur but the pressure will gradually decrease in the first half of the year. The upgrade story will be the decisive factor in attracting foreign net buying cash flow back, while also encouraging domestic cash flow.

“If the impacts of headwinds such as new tariff policies or fluctuations in interest rates and exchange rates are soon stabilized under control, Vietnam will continue to benefit from its position as an attractive investment destination with Cheap valuations and high profitability compared to many countries in the region. Factors such as political stability, legal reform and increasingly effective economic policies will help Vietnam continue to grow. , Mr. Tran Hoang Son added.

In terms of risks and challenges, VCBF experts note that President Donald Trump’s policies will also cause many fluctuations in the market. Exchange rates may remain under pressure in the short term and negatively impact investor sentiment. However, the exchange rate is believed to gradually cool down because the Fed predicts further interest rate cuts this year. In addition, the local currency will continue to be supported by FDI capital and trade surplus.