Entering January 2025, the Vietnamese stock market did not trade very successfully when the VN-Index mainly fluctuated within a narrow range and ended the month with almost no change. In the context of sharply reduced liquidity, in addition to the gloomy general market situation, foreign investors' transactions also decreased sharply compared to the same period last year, while continuing to sell strongly compared to the same period of net buying.
In January 2025, foreign investors continued to net sell 164 million units with a total net selling value of approximately VND 6,580 billion. On the HOSE floor alone, foreign investors net sold more than 115 million units, with a total net selling value of more than VND 6,320 billion, of which the biggest session on January 16 saw a net sale of 86.3 million units, worth approximately VND 3,107 billion.
Looking back at the whole year of 2024, in the context of interest rate differences and not yet upgraded the market, the stock market witnessed foreign investors net selling more than 3.5 billion USD in 2024. This is considered a record level in the history of Vietnamese securities. Not only for investors, the above record net selling figures also exceeded the forecasts of a number of analysis units and financial experts in the industry when over the past 20 months, foreign investors only temporarily stopped selling in January 2024.
According to analysts, the interest rate difference between USD and VND, monetary policy, high exchange rate... have significantly impacted foreign investors' actions in the past year. This has caused capital restructuring activities globally, with weaker growth markets, more depreciated currencies, or frontier markets experiencing strong capital withdrawals to allocate to more efficient markets. Not only Vietnam, but also markets in the region have been clearly affected by this wave.
Experts from ACBS Securities Company said that Vietnam is being ranked as a Frontier Market by FTSE Russell and MSCI - the two largest index providers in the world. In which, Vietnam's proportion in these two markets is the largest.
With the flow of money in the uncertain business environment tending to withdraw to the US, the Emerging Market is also being net withdrawn, not just the Frontier. Therefore, if Vietnam does not quickly transform itself into an Emerging Market, it will be very difficult to escape the situation of continued net selling.
With the Vietnamese stock market likely to be upgraded in September 2025, experts expect that foreign capital will return and thereby attract passive ETF capital of 300 - 400 million USD. As for active capital, it is forecasted to be about 3 - 5 billion USD within 5 years. In the short term, experts believe that the upgrade will only impact the psychology and cash flow of ETFs. The upgrade will not bring much immediate positive cash flow, but in the long term of 3 - 5 years, it is a great opportunity.
However, there are still warnings. In a recently published report, SGI Capital analysts stated that the market always agrees on the attractiveness of Vietnamese stocks, as well as the possibility of being promoted to Emerging Market soon, which will attract foreign capital, but in reality the opposite is happening. Vietnam is a market that has been sold off strongly in 4/5 recent years, with the largest selling rate in the region when calculated based on capitalization or total value held by foreign investors.
According to SGI Capital, the valuation of Vietnam’s stock market is not more attractive than other markets, although the majority of capitalization belongs to groups with high cyclical risks such as banking, finance and real estate. Therefore, the expectation of foreign capital returning to net buying in 2025 will be difficult to achieve if valuations are not cheap enough and exchange rate risks still exist.
