VCN – The active disbursement of foreign capital has created a driving force to support the market against short-term risks of ineffective performance of enterprises and the difficulties the economy is facing.
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| Net buying value of foreign sector by months |
In 2022, the market witnessed a drop to a more attractive valuation, attracting foreign investment, especially in the fourth quarter of 2022. Despite the less positive performance of the Vietnamese stock market, the cash flow from ETFs still increased in 2022. According to data from SSI Research, for 2022, foreign investors have net bought US$1.24 billion (mainly in the fourth quarter), the highest level since 2017. In addition, 14 ETFs provided an additional investment of US$1.1 billion for 2022.
In January 2023, foreign investors’ capital inflow trend remained positive. According to Viet Capital Securities Company (VCSC), foreign investors net bought US$178.6 million on all three floors.
HPG, FUEVFVND, SSI and VIC recorded the highest net buying values in the month with US$58.4 million, US$27.2 million, US$21.1 million and US$18.6 million, respectively. On the other hand, foreign investors net sold EIB (US$143.1 million), DGC (US$10.4 million) and DPM (US$6.6 million).
Meanwhile, in neighbouring markets, in January, foreign investors net bought US$545 million and US$122 million, respectively, on SET of Thailand and PCOMP of the Philippines and net sold US$204 million on JCI of Indonesia.
According to SSI Research’s experts, besides the positive cash flow from ETFs in January 2023, the disbursement of cash flow from funds into the stock market often has a delay, so the strong net buying of foreign investors in January is not a surprise factor. Regarding industry groups, the finance-banking and steel industries are attracting the most attention. It is because they have attractive valuations and meet liquidity conditions.
With a long-term investment outlook, the momentum from foreign investors is currently alleviating concerns about short-term risks. However, the decline in Q4 business results and macro data in January 2022 shows that the economy is facing many difficulties.
In the report on the 2023 strategy, Mirae Asset Securities Company’s experts said that the Government of Vietnam’s efforts in cleaning up the financial market, especially the corporate bond and real estate segments, will help improve the transparency of Vietnam’s financial market. Moreover, policymakers are still very flexible in supporting the economy, such as proposing to amend and supplement Decree 65 on corporate bonds. However, corporate bonds are still putting great pressure on the financial system when a large number of bonds will mature in 2023 in the context of interest rates tending to increase and the market needing time to adapt to a new legal framework with many important changes.
However, in the short term, SSI Research’s experts give a neutral point of view on capital flow after continuous disbursement. Besides, there are still challenges from the domestic macro situation, and the possibility of the cash flow into the Chinese market is not excluded, reducing capital inflows into neighbouring countries.
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In the early days of February, although the net buying remains, the selling increases, causing the net buying scale to narrow. However, according to KIS Vietnam Securities Company, the positive capital flow remains at the host ETFs, and there was no signal of withdrawal pressure. This implies that the current capital flow has a high level of stability. Therefore, experts of KIS Vietnam expect that the positive capital flow will remain in Vietnam in the coming weeks.
By Nguyen Hien/ Huyen Trang