Foreign investors pour big money into VN bonds

While foreign investors continue selling in the share market, they have been buying more than selling in the bond market since early 2019.

After buying shares in large quantities with the net sale of VND12.5 trillion in the first seven months of 2019, including the SK Group’s net purchase of VND5.7 trillion worth of VIC shares on May 21, and the purchase of VND1.2 trillion worth MSN shares on February 14, foreign investors have been selling more than buying since August.

Foreign investors pour big money into VN bonds



From the beginning of August to December 13, 2019, foreign investors’ net sales reached VND5.4 trillion, including net sale of VND5.8 trillion on the HCM City Stock Exchange (HOSE).

As such, if not counting two net purchase deals (VIC and MSN), the net purchase value in the first seven months of 2019 was approximately VND5.6 trillion, which was not much higher than the net sale value of VND5.4 trillion in the last 4.5 months.

While foreign investors continue selling in the share market, they have been buying more than selling in the bond market since early 2019.

Meanwhile, in the secondary government bond market, the net purchase value of foreign investors was VND13.9 trillion in the first 11 months of 2019, including VND6.5 trillion in Q1, VND4.2 trillion in Q2 and VND4.8 trillion in Q3. However, in the first two months of Q4, foreigners began selling more than buying with net sale of VND1.2 trillion.

 


The net sale in the last two months is attributed to the prediction about return of inflation and the profit-taking possibility to realize year-end profit, especially when the State Bank of Vietnam in November unexpectedly slashed the deposit interest rate ceiling and OMO (open market operation) interest rate after cutting other management interest rates in September.

In the latest news, in the first half of December 2019, foreign investors bought more than sold again with the net purchase value of VND1.2 trillion. The net purchase value reached VND1.988 trillion on December 12 alone.

This led to analysts believing that the net purchase would continue in upcoming days.

Trading strategies

Analysts said that the concerns about possible global recession prompted investors all over the world to escape risky assets, including shares, and seek shelter in the bond market.

The Vietnamese share market recently had less than a positive performance and the VN Index could not escape the 1,000 point threshold.

These factors explained why foreign investors tried to escape shares and shifted to pouring money into bonds.

Investing in Vietnam’s government bonds is believed to be a wise move for now. While other economies depreciate their currencies against the US dollar to boost exports, Vietnam has kept the dong value stable. This has helped restore investors’ confidence in Vietnam’s market.

Linh Ha 

Bond market boom worries authorities

Bond market boom worries authorities

Banks and enterprises have rushed to issue corporate bonds in 2019 with record high value and interest rates. The hot corporate bond market has raised concerns.

Local G-bond market value reaches over 25% of GDP

Local G-bond market value reaches over 25% of GDP

The size of the local Government bond (G-bond) market by the end of last month was equal to 25.1% of the country’s gross domestic product in 2019, marking a 12-fold increase over 2009.  

 
 

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