Circular 68/2024/TT-BTC of the Ministry of Finance officially took effect from November 2 - meaning that foreign investors and organizations are allowed to buy stocks without having to have enough money.
This has led investors to expect that it will contribute to improving the strong net selling trend of foreign investors.However, in reality, in the short term, the net selling trend of foreign investors shows that Circular 68 has not had the expected impact.
According to statistics from MBS Securities Company, by the end of October, the net selling value of foreign investors reached nearly VND79,000 billion, an unprecedented level in history.
In October alone, foreign investors net sold VND9,844 billion, with a series of net selling in the last 15 sessions of the month.And in just the first two trading weeks of November, this group net sold nearly VND7,600 billion.
This development shows that new regulations along with information affecting the market are still not strong enough to bring domestic cash flow back to balance, preventing foreign cash from being withdrawn.
The stock market still lacks enough momentum and a group of stocks that are strong enough to attract cash flow into the market.
In addition, according to experts, the strong net selling of foreign investors also comes from the reversal of net withdrawal from ETF funds and the general net withdrawal trend of multinational investment funds withdrawing from emerging markets, while the group of active funds in Vietnam has only slightly withdrawn in the past 4 months.
The reason comes from the difference in real interest rates between the US and other countries, in addition to Vietnam's monetary policy diverging from that of the US and partly from profit-taking activities after a period of strong net buying in the 3 months of November 2022, December 2022 and January 2023 with a total value of up to 32.5 trillion VND.
It can also be seen that foreign net selling since the beginning of the year has been concentrated on certain stocks, which partly reflects the portfolio restructuring activities.
Currently, experts all share the same opinion that upgrading the Vietnamese stock market is the biggest concern of foreign investors at present.
Regarding the future prospects, when the Vietnamese stock market is upgraded to an emerging market, Morgan Stanley representatives predict that it can help attract 800 million USD from passive investors using the FTSE index and 2 billion USD from passive investors using other indexes.
At the same time, active funds will participate more actively, with an expected flow of about 4-6 billion USD into Vietnam.
However, in order to attract foreign fund flows in the longer term, in addition to being upgraded from a frontier market to an emerging market to be able to activate a certain amount of ETF capital, the stock market should develop more deeply.
It is necessary to increase the number of listed enterprises on the stock exchange to diversify the listed industries, thereby, enterprises will also reduce their dependence on bank credit; increase the participation rate of institutional investors, including pension funds to help stabilize the market.
Commenting on the medium and long-term trends, analysts all made forecasts for 2025, with the stock market outlook being supported by positive growth in listed enterprises' profits; the prospect of upgrading is becoming clearer.
In which, Circular 68 is an important step forward; stable macro indicators… then foreign capital will soon return to seize market opportunities.
