Foreign net selling puts pressure on stock market

The stock market is at risk of losing the safe zone at 1,240 points as bottom-fishing demand has not yet stopped the downward momentum under strong net selling pressure from foreign investors.

With the market still struggling at the bottom, this development will cause concern for investors, especially the adjustment pressure from large-cap banks.

Since the beginning of November, foreign investors have been net sellers continuously in trading sessions.In the past two weeks, foreign investors have net sold more than VND 4,500 billion on the HOSE floor.

If counting from the beginning of 2024, only January recorded net buying from foreign investors, and this group has been net sellers continuously since February.The scale of net selling since the beginning of this year on the HOSE floor has reached more than VND 70,000 billion, a record level since the Vietnamese stock market began operating.

According to the Analysis Department of SSI Securities Company (SSI Research), last month was also the 10th consecutive month of net withdrawals from ETF funds, bringing the net withdrawal value since the beginning of the year to more than VND 21,000 billion, equivalent to a 28% decrease in total assets compared to the end of 2023.

In the same direction as ETF funds, active funds also suffered a net withdrawal of VND 2,700 billion in October, from both active funds that only invest in Vietnam and multinational funds.This trend is also similar to the net selling status of foreign investors in the market.

The withdrawal of foreign capital, according to analysts, comes from exchange rate pressure and performance differences between markets.In addition to the exchange rate story, foreign capital flows are also due to performance differences between markets.The Vietnamese stock market is currently classified by two organizations, MSCI and FTSE Russell, as a frontier market.

In particular, FTSE Russell put Vietnam on the waiting list for upgrading to Group 2 - emerging markets.In terms of the increase in stock indexes, frontier and emerging markets have much lower performance compared to developed regions.In the context of markets such as Wall Street, Japan and South Korea growing rapidly, the pressure to shift capital flows is inevitable.

Commenting on the trend of the stock market, it can be seen that although the index showed signs of recovery when it retreated to the support zone around 1,240 points, the cautious state of short-term transactions has not been completely removed and the adjustment pressure has reappeared.

Liquidity remained low, equivalent to the previous week, showing a slowdown in both supply and demand.Short-term transactions seem to be still assessing the impacts of Donald Trump's upcoming US presidency on the Vietnamese economy and waiting for more information to support the domestic stock market.

The sluggishness of cash flow also comes from the fact that cash flow has not yet confirmed the leadership of large-cap stocks, when fluctuations and short-term adjustments in stocks in the VN30 basket appear and show signs of lasting, testing patience for current transactions.

From a technical perspective, the short-term adjustment trend is continuing, but the 1,230 - 1,240 point area plays an important support role.

However, the opportunity to create a bottom and establish an uptrend up to now needs to be confirmed on new trend breakout signals based on strong improvement in liquidity and the leadership of large-cap stocks in the coming time.