New securities accounts record all-time high

Vietnamese individuals opened 270,217 securities accounts in March, a record monthly high, according to the Vietnam Securities Depository.

The spike shows the intense wave of individual investors entering the local stock market despite the VN-Index’s stagnation around its old peak of 1,536 points. It broke the previous peak of 226,390 accounts reached in December 2021.

Analysts attributed the surge to low deposit interest rates, economic recovery, the attraction of securities as an investment channel, high market liquidity, and the application of eKYC - the remote, paperless process that minimizes the costs and traditional bureaucracy necessary in the “know your customer” processes.

The market liquidity has improved, with average transaction on the country's three stock exchanges jumping 14.5% in March from last quarter and 61.2% year-on-year.

In particular, the average transaction on the HCMC Stock Exchange (HoSE) rose 11.4%, while this figure climbed by 40.3% and 18.2% on the Hanoi Stock Exchange (HNX) and the Unlisted Public Company Market (UpCOM), respectively.

According to the Vietnam Securities Depository, over 675,000 new trading accounts were opened by domestic individual investors in the first quarter, which is about half of the figure in the entire 2021.

Of the 4.98 milion accounts in total, equivalent to about 5% of the population, domestic individual investors accounted for 98.9%, with the remainder coming from domestic corporations, foreign organizations and foreign individuals.

Foreign investors opened 419 new accounts in March, up 157 accounts from last month. However, foreign investors were back to net sell with a value of more than VND4,000 billion ($174.94 million) on HoSE after a brief lull in February.

The foreign investors’ continual net selling may be driven by the Fed's monetary tightening policies given rising inflation in many countries. However, many experts suggest that foreign capital will soon inch back to Vietnam bourses in 2022.

"Looking at Vietnam’s economic fundamentals and vaccination coverage, I believe foreign investors will prefer to stay here, rather than elsewhere. I expect they will return, contributing to the stability of the market this year and being a firm pillar for the market in 2022 and 2023,” said Le Xuan Nghia, Vietnam’s top banking expert.

Nghia highlighted several essential elements that will attract foreign investment in 2022, such as an inflation rate of less than 4% while many countries might see it around 10%, an economic expansion of around 5.5%, and positive FDI growth. Specifically, the currency rate has remained stable over the last three years, and the country's foreign exchange reserves have reached an all-time high of $109.9 billion, successfully supporting exports and investment.

Viet Dragon Securities (VDSC) in its annual report predicted that the Vietnamese stock market would have an average of 150,000 new accounts opened each month this year.

Michael Kokalari, chief economist at VinaCapital, predicted that the number of stock investors in Vietnam could triple in the next 10 years if the country follows Taiwan's trajectory.