The VN-Index is still moving up though investors are worried about risks which may affect the prices of stocks, including blue-chips such as bank, real estate and securities shares.

Observers report that foreign investors continue their net sales. Meanwhile, domestic individual investors keep buying, thus balancing sales and purchases in the market.

Two questions have been raised: Why do foreign investors continue to sell Vietnam’s stocks? And why do domestic investors still inject money into shares?

Strange happenings

Nguyen Tien Duong, an investor in HCM City, said he was surprised when seeing the VN-Index increasing recently and moving towards the 1,300 point threshold.

Investors have been warned that the stock index cannot increase much because of risks in Vietnam and the world.

Foreign investors’ continued net sales for years concerns Duong. However, he also noted that the domestic cash flow, especially from individual investors, remains very strong.

On July 8, a lot of blue-chips were sold. Foreign investors’ net sales reached a record high of VND2.5 trillion, following net sales of $2 billion in the first six months of the year, or VND300 billion per trading session.

Though major shares witnessed sharp price decreases, the VN-Index still increased this trading session thanks to the strong rise from small and medium shares. The VNSmallcap at HOSE (HCM City Stock Exchange) increased by 0.86 percent.

On July 9, the closing VN-Index was 1,293.7 points, up 1.15 points, or 0.8 percent. The pressure from the foreign investors’ net sales of the previous trading session could not stop the cash flow from individual investors.

Cash was injected into key shares for bottom fishing, which increased the prices of 25 out of 30 key shares belonging to VN30 group.

Recent reports showed that foreign investors sold more than bought recently because of the high dollar interest rates in the international market. The US FED has maintained its prime interest rate at 5.25-5.5 percent, while the interbank interest rate in Vietnam sometimes has fallen to below 0.5 percent per annum.

Foreign investors’ net sales are also attributed to the continued appreciation of the dollar in the first six months of the year, and the risks in Vietnam and the international market.

Observers note that investors’ capital withdrawal is not only occurring in Vietnam but also in China, Indonesia and Thailand.

Domestic investors

The Vietnamese stock market is still bright as it continues the recovery trend in November 2023. The market witnessed a correction in April and 1.3 percent decrease in June. However, the VN-Index has increased by 10.2 percent since the beginning of the year.

Van Tam, an investor in Hanoi, said he poured money into some shares recently as he noted that dong depreciation had eased, while macroeconomic statistics had become more positive, while money is still cheap and other non-stock investment channels are not attractive (bank deposit interest rates have moved up very slightly).

Tam believes that despite risks, the stock market still deserves investment, especially because many listed companies have predicted good business results for the second quarter.

The pressure on the dong/dollar exchange rate has eased. The greenback in the free market saw the price drop from VND26,000 per dollar to VND25,870 on July 9. Meanwhile, Vietcombank on July 9 quoted the dollar price at VND25,454 per dollar (it was VND25,470 in late June).

Vietnamese individual investors have been encouraged by good macroeconomic performance in the first half of the year. The GDP in the second quarter grew by 6.93 percent, higher than that predicted by most large financial institutions. The growth rate was the sharpest increase in the last 13 years, except the special period of 2022 (+7.99 percent).

Meanwhile, Vietnam’s total export turnover reached $190  billion, up 14.5 percent over the same period last year, higher than the record of $185 billion made in the first half 2022. FDI disbursement also made a record, $10.84 billion, up 8.2 percent. The number of foreign travelers to Vietnam reached 8.8 million, up 58.4 percent over last year.

According to Saigon Securities Incorporated (SSI), the stock market will continue its growth. The P/E in 2024 is now 11.5x.

SSI believes the VN-Index will be around 1,300-1,350 by the year-end. 

Manh Ha