Domestic investors have recently seen shares of the dairy giant Vinamilk (VNM) as an appealing invesment, but foreign investors think the contrary.

The trading volume of Vinamilk's stocks on the Ho Chi Minh Stock Exchange (HoSE) increased, with liquidity improving significantly since the beginning of the year, especially after successfully testing the double pattern.

A jump in transactions also helped the liquidity of the country's leading dairy producer set a new record.

Strong cash flows have helped VNM to hit a two-month high, rebounding from the lowest in a year. However, the main momentum of the recovery came from domestic investors, while foreign ones accelerated net selling activities.

Foreign investors net sold nearly VND1.5 trillion (US$63.6 million) worth of VNM shares since the beginning of June. The figure doubled that of the previous months and was the lowest value in 18 months. And if the trend continues, VNM will log the fifth consecutive month of net selling.

Since the beginning of the year, the company's shares recorded a net sold value of more than VND2.5 trillion. Counting the order matching alone, the shares were sold the most on the whole stock market.

Net selling pressure may affect VNM's recovery as foreign investors are still holding about 60 per cent of the dairy producer's shares.

VNM was the largest enterprise on the domestic stock market for a long time and a favourite investment among foreign investors. However, challenges in profit growth strategy after its golden age made it less appealing.

Although the list of 20 largest shareholders is still mostly foreign organisations, the majority of ownership belongs to two organisations: the Fraser and Neave Ltd (F&N) of Thai billionaire Charoen Sirivadhanabhakdi and Platinum Victory PTE of Jardine Cycle & Carriage (JC&C). Both shareholders have held shares in Vinamilk for a long time.

Despite the recent strong rebound, Vinamilk is expected to face many obstacles to return to its glory days.

Milk is considered an essential food in Viet Nam, especially for infants and children, but due to declining incomes, consumers are more sensitive to prices. Persistent high inflation and rising costs are also affecting consumer spending.

Even though Vinamilk continues to lead the domestic's liquid milk market, it is facing increasing competition and seems to be losing market share over the past year. But programmes to innovate and improve as well as expand distribution coverage and brand recognition will increase marketing and advertising expenses.

SSI Research said that the company should conduct a review of main product lines to improve quality as well as packaging, research and develop new products, and cooperate with international nutrition companies to develop infant formula products in order to protect market share.

The VNM shares went against the market's downtrend on Thursday to close higher at VND71,900 a share, up 1.84 per cent. — VNS