Foreign investors will return to net buying in the Vietnamese stock market this year to catch opportunities from the market status upgrade from “frontier” to “emerging”, said experts.
Their capital flows may target stocks with large capitalization that still have "ownership room" for foreign investors and meet the needs of liquidity-related criteria, they added.
The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), ended the third trading week of 2024 at 1,181.5 points, the highest level in the past four months.
Notably, foreign investors turned net buyers to the tune of more than VND586 billion ($23.9 million) on the HoSE, focusing on banking, retail, and steel stocks.
Statistics show that MWG of retailer Mobile World led the list of stocks net bought by foreign investors with total value of VND548 billion ($22.34 million). It was followed by banking stocks such as STB of Sacombank, VCB of Vietcombank, VPB of VPBank, BID of BIDV and CTG of VietinBank.
In addition, foreign cash flowed into HPG of steel giant Hoa Phat with VND206 billion ($8.4 million), VHM of real estate developer Vinhomes VND132 billion ($5.38 million), and VCG of Vietnam Construction and Import-Export Joint Stock Corporation (Vinaconex) VND101 billion ($4.12 million).
This move by foreign investors has led to high market expectations as they net sold more than VND19.5 trillion ($794.9 million) last year.
Nguyen Hoai Thu, portfolio manager/investment director at VinaCapital, said foreign investors still have faith in the sustainable development ability of the Vietnamese economy and appreciate the country’s economic-political-social stability, the increasing income and demand of 100 million people, and the possible upgrade of Vietnam's stock market status from ‘frontier’ to ‘emerging’ in the next 2-3 years.
"If Vietnam's stock market is upgraded, additional foreign capital flows could reach $5-8 billion," Thu said, citing that in countries that have had their stock market upgraded, usually capital flows, both domestic and foreign, arrived strongly within 1-2 years before the official upgrade.
Sharing the same opinion, Le Duc Khanh, analysis director at VPS Securities Company, said that from the first quarter of 2024, foreign investors will return to net buying in the Vietnamese stock market to catch opportunities from the upcoming market upgrade.
"The stock investment channel can strongly attract cash flows and the VN-Index can surpass the area of 1,250-1,350 points in 2024," Khanh forecast.
This expert added that Vietnam has a better economic growth outlook this year thanks to the acceleration of key infrastructure projects using the state budget. Liquidity and capital flow bottlenecks in the financial and real estate markets have also been gradually removed.
"Therefore, the investment environment has become more positive for not only domestic investors but also foreign ones," he affirmed.
In a positive scenario, BIDV Securities (BSC) said that foreign investors will increase net purchases by $700 million with supporting factors including the gradually narrowing interest rate difference between the U.S. dollar and Vietnam dong as the U.S Federal Reserve (Fed) has begun to reduce interest rates.
This scenario can be backed by the process of upgrading the Vietnamese market and Thai investors gradually becoming active again after new tax regulations take effect from this year, it added.