New securities accounts double despite market plunge

Vietnamese investors opened 476,455 new securities accounts in May, doubling the previous month's figure, despite strong market downturn, according to Vietnam Securities Depository.

This is an all-time high, up 76% from the previous record of over 270,000 accounts set in March.

Domestic retail investors remain key drivers, with 476,332 new accounts, while domestic institutions added 123.

By the end of May, domestic retail accounts were equivalent to 5.7% of Vietnam’s population, with 1.4 million opened in the first five months of 2022, 2.5 times higher year-on-year and 90% of the 2021 figure.

There were 41,118 foreign accounts by the end of May. Of this, personal accounts climbed by 298 in May, down 9.4% year-on-year. While foreign organizations experienced a decline of 42 accounts as a result of closures outperforming new openings.

Vietnam's stock market closed last month with a total 5.7 million accounts, of which domestic individual investors accounted for 99.7%, with the remainder coming from domestic corporations, foreign organizations, and foreign individuals.

Despite repeatedly setting records for new open accounts, market liquidity declined significantly in recent months, notably in May.

In particular, the Ho Chi Minh Stock Exchange (HoSE) last month recorded VND15.2 trillion ($655.5 million) in transaction value, down 31% from April and 31% year-on-year.

On the three exchanges, transaction volume and value averaged around 79 million units and VND1.7 trillion ($73.3 million) per session, down 16% and 32% month-on-month.

Liquidity weakened due to limited transactions among domestic individual investors. Meanwhile, foreign investors made up 9.9% of the total transaction value on the HoSE in May, up 1.8% from April.

Vietnam's stock market experienced a significant drop in May, with the VN-Index temporarily setting its lowest level this year at 1156.54 points, according to South Korea-backed Mirae Asset Securities.

The broker attributed the market downturn to global uncertainties like China’s lockdown, the prolonged Russia-Ukraine conflict and related sanctions, the U.S. Federal Reserve’s interest rate hikes, and high inflation.

In addition, official investigations into market manipulation and tightening bond issuance conditions also impacted domestic investor sentiment.

Domestic individuals and organizations, that made up 82% and 8% of the total transaction value, remained net sellers to the tone of VND489 billion ($21 million) and VND2.7 trillion ($116.4 million) respectively in May.

Domestic net sales were absorbed by foreign investors, who made up about 10% of the total transaction value, with a net purchase of VND3.2 trillion ($138 million).

Exchange-traded funds recorded a net injection of $213.5 million in May and $265.3 million in the first five months, with Taiwan-backed Fubon FTSE Vietnam and Dragon Capital’s VNDiamond DCVFM among the most active.