As of December 17, foreign investors had sold a total net value of VND13.3 trillion (US$575 million) on the Ho Chi Minh Stock Exchange after net-buying local assets for three consecutive years.— Photo ndh.vn
Despite the positive outlook of the Vietnamese economy in 2020 and years to come, foreign investors have remained net sellers for most of the time this year.
As of December 17, foreign investors had sold a total net value of VND13.3 trillion (US$575 million) on the Ho Chi Minh Stock Exchange after net-buying local assets for three consecutive years.
If put-through transactions were excluded, which were mostly net-buying deals, the total net foreign selling would increase to VND36.2 trillion.
According to Tran Van Dung, Chairman of the State Securities Commission, large-sized foreign investors had to divest from emerging markets, including Viet Nam, on worries about the COVID-19 pandemic.
Deputy CEO and investment director of PVI Asset Management Nguyen Duc Hung Linh said that the global economy had been dragged down by the COVID-19 pandemic.
Foreign investors had no other choice but cutting the proportion of risky assets in their portfolios, he told reporters at a meeting this week.
In more developed markets where the pandemic has been well-contained such as China and South Korea, the foreign capital had returned, he said.
But the situation in Viet Nam was different because Viet Nam had not been moved up to the emerging markets status and it was considered riskier for investors, Linh said.
The creation of exchange-traded funds (ETFs) tracking the main indices such as VN30 and VN Diamond had drawn attention of foreign investors, he said.
“Foreign investors are interested in buying ETF certificates because they are able to hold the stakes in the local firms that have run out of room for foreign investment,” he said.
“Foreign investors also want to seek opportunities to become the major shareholders in local firms,” he said. “The long-term problem with the Vietnamese market is whether it provides high-quality commodities and stocks to satisfy the investors.”
The amended laws on the securities market, enterprises and investment may help resolve problems related to foreign investments, Ho Chi Minh Stock Exchange’s chairman Le Hai Tra said.
SSC chairman Dung said some solutions had been discussed to resolve foreign investment-related issues such as the non-voting depository right (NVDR), but it would take time for those solutions to be realised. — VNS