Choppy market: A file photo of the stock exchange building in Ho Chi Minh City. Foreign ETFs withdrew a total of US$55mil from Vietnam in March. — AFP
HANOI: Foreign investors in the Vietnamese stock market continued net selling in the first quarter of 2024, with active funds and exchange-traded funds (ETFs) contributing to the selling pressure.
However, specific sectors, such as insurance, chemicals, and banking, attracted foreign capital.
In the market outlook report for the week of April 15 to 19, 2024, BIDV Securities Co (BSC) provided an updated analysis of foreign capital flows and ETFs in the first quarter of 2024 and a forecast for the second quarter.
According to BSC, foreign investors sold a net total of 11.55 trillion dong across all three exchanges in the first three months of 2024, equivalent to 50.62% of the total net selling value in 2023.
The most robust net selling occurred on March 23, with foreign investors selling over 6.5 trillion dong. The selling pressure came from active funds and ETFs, resulting in a continued net withdrawal that exerted pressure on the market.
In March, foreign ETFs experienced a significant increase in net withdrawals, surpassing a total of US$55mil. The ETF with the highest net withdrawal was Fubon (US$33.9mil), FTSE with a net withdrawal of US$20.2mil and Premia with US$1.16mil. Throughout the first quarter of 2024, foreign ETFs had a net withdrawal of US$82.4mil, marking the fourth consecutive month of capital withdrawals.
Domestic ETFs also saw record net withdrawals in the first quarter, totalling US$225.48mil, nearly equivalent to the net withdrawals for the whole of 2023 (US$267.72mil). The net selling trend persisted in the three domestic main ETFs: Diamond (US$173.51mil), E1 (US$30.69mil) and Finlead (US$20.88mil).
BSC stated that foreign investors have been consistently net selling for five consecutive quarters, although the trend varies among industries. Compared to the fourth quarter of 2021, when foreign investors net sold over 22 trillion dong, the chemical, retail and utility sectors experienced net buying.
Although the overall trend was to sell, foreign investors still invested heavily in certain sectors, such as insurance, chemicals, and banking, during the first quarter of 2024. The banking sector, in particular, attracted attention from foreign investors, ending a five-quarter net selling streak.
Do Hong Van, head of analysis at FiinGroup, said that the majority of net selling by foreign investors occurred in the last two weeks of March, coinciding with the net asset value closing of the first quarter’s funds. Notably, the selling was driven by active funds rather than ETFs.
According to Van, the selling by foreign investors is a global phenomenon, with funds flowing into developed markets while weakening in Asian markets, including Thailand and Vietnam. Additionally, factors such as exchange rate fluctuations and a limited range of stocks, primarily focused on real estate and banking rather than trending sectors like technology and green energy, contribute to the unattractiveness of the Vietnamese stock market for foreign investors.
However, there is a positive development as foreign-demand has recently emerged, primarily driven by the Fubon Fund from Taiwan. To confirm the trend, foreign investors would need more net buying sessions.
Stabilising the exchange rate and addressing market upgrade obstacles will be crucial for retaining foreign capital. — Viet Nam News/ANN
