From a pessimistic mentality of not knowing where the bottom was and how far the market could go, investors have now breathed a sigh of relief when the VN-Index successfully "patched" the strong psychological threshold of 1,200 points in the trading session on November 20.
The bright spot of the market belonged to the real estate stocks with a series of codes racing to accelerate.The VN-Index closed the session with an increase of more than 11 points, only confirming a technical recovery session after a series of 4 consecutive sessions of deep decline, with liquidity still at a standstill, reaching less than 18,000 billion VND.
The market could not explode because strong cash flow had not returned and foreign investors continued to net sell strongly.In contrast to the vibrant domestic demand that helped the general market recover positively, foreign investors still maintained a strong net selling status with a value of more than 1,200 billion VND on the HOSE floor alone.
If calculated from the beginning of the year until now, foreign investors have net sold more than 88,000 billion VND.The record net selling volume of foreign investors since the beginning of the year partly explains why the VN-Index has not been able to successfully break out of the 1,300-point threshold, although the SP500, Dow Jones and Nikkei indices have continuously set new peaks in 2024.
The development of foreign capital flows is closely related to the story of interest rates and USD exchange rates.
The pressure on the USD/VND exchange rate is large, along with the good growth momentum of technology stocks, large semiconductor manufacturers in the world, and attractive interest rates from government bonds in developed countries, causing foreign capital to tend to withdraw from emerging and frontier stock markets, including Vietnam, to enjoy better yields.This is not a new story.
According to analysts, Vietnamese stocks have been net sold by foreign investors for more than 2 billion USD since the beginning of 2024, which is a very large number.If the market is not upgraded, it is likely that foreign investors will continue to net sell.
In order to upgrade the stock market, Vietnam needs to improve the foreign ownership ratio.The goal of upgrading therefore requires synchronizing many solutions.Especially the solution to allow foreign institutional investors to buy securities without having to have 100% of the money in the account (pre-funding) and room for foreign investors.
In particular, pre-funding is an important step to increase liquidity and attract foreign investment capital into the Vietnamese stock market.
This is also expected to support the process of upgrading the market from frontier to emerging according to MSCI and FTSE standards, especially when Vietnam is still aiming for an upgrade by 2025 and the largest index fund investing in frontier markets has stopped operating (iShare Frontier ETF).
In fact, foreign funds still have high expectations for the prospects of the Vietnamese stock market in the medium and long term.
If Vietnam can take advantage of FDI capital, develop a highly qualified workforce, and enhance the intrinsic value of domestic enterprises, foreign investment capital will certainly flow into the Vietnamese stock market.
The groups of stocks that will benefit include industrial real estate, manufacturing, information technology, semiconductors, large-cap stocks, and stocks that meet ESG criteria.
When the Vietnamese stock market is upgraded and meets other strict standards, many funds and large asset management companies from developed countries will consider this a quality asset group and are ready to invest in it.
