While Vietnamese investors took no action in the week of January 22-26, foreign investment funds rushed to buy Vietnamese stocks when demand was low, as Tet nears.

Foreign investors continued the net purchase after they made a net sale of billions of dollars worth of shares in 2023.

Dragon Capital last week spent hundreds of billions of dong to buy 4.5 million more Vinaconex shares (VCG), raising its ownership ratio from 6.87 percent to 7.72 percent.

After two disappointing years with a loss of 36 percent in 2022 and performance of 10.3 percent (lower than the average level), in 2023, VEIL, the largest fund managed by Dragon Capital, is targeting shares in steel, building materials and public investments.

Dragon Capital officially became a big shareholder at Vinaconex after VEIL successfully bought 1.3 million VCG in a bottom fishing act, raising its ownership ratio to above 5 percent.

In mid-December 2023, Hoa Phat shares (HPG) were back to the No 1 position in its investment portfolio, worth $1.7 billion. The number of HPG shares accounts for 9 percent at Dragon Capital, two years after the foreign investor withdrew capital from the steel group owned by billionaire Tran Dinh Long.

Reports show that foreign investors’ net purchases reached VND1.3 trillion. The strong purchasing power supported the stock market which showed signs of investors withdrawing money before Tet, which lowered liquidity.

In addition to VCG, foreign investors purchased other stocks, including HPG, Eximbank shares (EIB), VietinBank (CTG), Sacombank (STB), HCM Securities, Binh Son Petrochemical and Refinery (BSR), VPBank (VPB) and Hoa Sen Group (HSG).

As such, foreign investors bought more than sold in the last 11 out of 12 trading sessions. Securities companies’ shares were the most wanted.

In the last trading session last week, the market witnessed securities companies’ net purchase of VND550 billion worth of shares.

Meanwhile, bank shares were on the decrease, putting pressure on the market. The VN-Index dropped by 0.5 percent to 1,175.67 points on January 26.

The cautious cash flow before Tet led to a decrease in order matching liquidity on January 26, dropping to below VND11 trillion.

Securities: most attractive channel in 2024

In its recent report, Dragon Capital believes that cash flow will head for the stock market in 2024 and securities will be the most attractive investment channel thanks to predicted high profit growth rates of listed companies.

Currently, the Vietnamese stock market has a capitalization value of $240 billion.

According to Dragon Capital, a new recovery cycle began last year when the national economy began escaping the negative impact caused by changes in policies on the corporate bond market.

Nguyen Duc Nhan from KB Securities also has an optimistic view about the stock market in 2024. He said the liquidity decrease is not a big problem as it is often seen on days just before Tet. The market will bounce back after the holiday.

Nhan predicted that the VN-Index may see a new spell of sharp share price increases for the third time in the history of the stock market. The previous two spells occurred in 2005, when Vietnam expected it would join the World Trade Organization (WTO), and in 2020, when loosening monetary policy was applied all over the globe, including Vietnam.

According to Dragon Capital, recent economic indicators show positive happenings. In general, the stock market is often 4-6 months ahead of the economy.

In 2024, the world economy is believed to continue to face challenges, but Vietnam’s economy will recover as interest rates have been cut.

Injecting money into securities is seen as an attractive investment as 12-month deposit interest rates have been cut to 5 percent per annum. 

Meanwhile, the real estate market remains quiet and investment in the market requires huge capital.

Maybank Securities has designed two scenarios for Vietnam’s stock market in 2024. Under the positive scenario, Maybank predicted that the VN-Index may reach 1,420 points.

Manh Ha