Besides the negative developments of domestic investors, which caused the general market to have another less optimistic trading week, foreign investors also continued to increase net selling, with a value of nearly 1,500 billion VND.
The current story of foreign net selling does not put much pressure on the market but still has many impacts. Looking back at 2024, the market witnessed the largest net withdrawal of foreign investors in the past 20 years, withdrawing more than 3.1 billion USD, but the VN-Index still anchored at a high level, with a margin of 1,200 - 1,300 points.
Mr. Tran Hoang Son - Director of Market Strategy VPBankS Research - provided data that in the period 2005 - 2007, the stock market had a wave of joining the WTO, attracting 2-3 billion USD.
During the wave of State capital divestment (from 2016 to 2018), the market attracted a large amount of money from abroad. It is expected that the market is in the third big wave, which is the wave of market upgrading in the second half of 2025.
According to analyst Tran Hoang Son, liquidity may remain flat from late 2024 to the first half of 2025 at an average and low level. However, in the second half of 2025, starting in August, liquidity will increase, triggered by the upgrade when domestic and foreign cash flows increase their purchases again.
Vietnam's stock market valuation is relatively attractive compared to many countries in the region and emerging markets. The current P/E is lower than the 10-year median.
It is forecasted that from now until the end of 2024, with the context of net selling pressure from foreign investors, high exchange rates and the first half of 2025 possibly welcoming Mr. Trump's new tax policy, the VN-Index will fluctuate around 1,200 - 1,300 points.
With the scenario of the market being upgraded in September 2025, market liquidity will rebound, with foreign investors net buying in August and September 2025.
Vietnam has met 7/9 of FTSE's upgrading criteria, and the important condition is to establish a Clearing House. The House is currently being completed, so it is forecasted that the market will meet all upgrading criteria in September 2025.
If upgraded, Vietnam can mobilize 1.7 billion USD of passive capital and 6-7 billion USD of active capital. Looking back at countries that have had stories of upgrading, capital inflows are very strong. In China alone, group A shares have mobilized 200 billion USD.
Dr. Nguyen Duy Phuong - Strategic Investment Director of DG Capital has the opinion that upgrading the market is a condition but not everything to attract foreign capital. Whether foreign capital returns or not depends on the interest rate difference, whether the US interest rate policy can be reduced strongly to 2% as before?
Analysts also agree that the Vietnamese stock market has great potential because it is currently at a low valuation level, while the US market is at a very high valuation level.
Experts expect that at some point, the US market will no longer attract capital inflows, interest rates will fall, causing capital flows into US stocks and bonds to reverse, at which point money will flow into emerging markets. Any market that takes advantage of the opportunity will receive strong capital flows, and with Vietnam's reform policies, it is expected that capital flows will return.
