[NEWS] - Vietnam’s stock market is still attractive with foreign capital flows

Foreign capital inflows have been a "bright spot" on Vietnam’s stock market for many months. Although it is difficult to have a sudden change, according to many experts, the trend of net buying is likely to remain strong in the year-end period, because the Vietnamese market has many attractive factors for foreign capital flows.

Become an important force of demand

The stock market still maintained its ups and downs in the first half of August. The VN-Index firmly consolidated the resistance level of 1,200 points and is gradually moving towards the 1,300 mark, although the market will suffer. big profit taking pressure and entered the information valley.

Meanwhile, trading statistics of foreign investors for the week of August 15 - 19 showed that foreign investors were still the bright spot of the stock market with the 5th consecutive week of net buying. Even this block trade was more active than the previous week, when the net buying value increased well again, with 525 million shares. Since the beginning of the year, foreign investors have been net buyers on HOSE of 3,851 billion dong, of which they bought 2,572 billion dong through matching and 1,279 billion dong through put-through.

According to Mr. Tran Truong Manh Hieu - Head of Strategic Analysis Group, KIS Vietnam Securities Joint Stock Company, the transaction value of domestic investors usually accounts for more than 90% of the total transaction value per session, so the cash flow of domestic investors will still have a major influence on the trend of the stock market. Foreign investors’ cash flow only accounts for less than 10%, so the influence is quite modest. However, from April 2022, foreign capital inflows are playing a larger role when they are net buyers again.

The stock market attracts foreign capital flows (Image: VNExpress)

Agreeing with the above view, Mr. Nguyen The Minh - Analysis Director of Retail Banking Division of Yuanta Securities Vietnam said that currently the most attractive factor of Vietnam’s stock market is valuation. In addition, the psychology of foreign investors is usually towards long-term investment trend, so the period of sharp decline is a great opportunity for foreign investors to buy.

Product diversity, information transparency

In addition, many experts believe that the efforts of the management agency in reviewing, investigating and handling violations on the stock market over the past time have also contributed to improving the transparency of the market and enhancing the transparency of the market. confidence of foreign investors.

Many forecasts suggest that ETF capital flows in the last months of the year may still maintain a certain attraction to attract investors in the region such as Taiwan, Singapore, and Thailand, with newly launched products such as funds.

DCVFMVNMIDCAP (focusing on mid-cap stocks in the VNMidcap index) and KIM VNFINSELECT fund (focusing on financial stocks in the VNFIN Select index), where individual investors from Taiwan, Singapore, and Thailand dominate this transaction.

According to experts, to attract more foreign capital flows, it is necessary to improve the transparency of the market and have more products. For foreign investors when accessing the Vietnamese market, it is very difficult for them to access important information. This results in the block incurring unnecessary additional risk. Therefore, improving transparency could be the key to attracting foreign investors.

In addition, foreign investors can only invest in the Vietnamese market with quite limited products. Derivatives market, although the scale is increasing year by year, but compared to the stock market, it is still quite modest, warrant products are hardly interested by foreign investors. Therefore, the investment strategy of this block in the Vietnamese market is quite limited.

Especially, when Vietnam has not yet allowed short selling. The lack of investment products may reduce the market’s attractiveness to foreign investors. Besides, if there are more products, foreign investors can also implement more investment strategies. Along with the stability of the economy after the pandemic and the prospect of attracting foreign capital flows, Vietnam’s stock market may soon achieve new achievements in the future.

Cao Duy