Stock market anticipates a fresh breeze.

Liquidity plummeted and foreign investors sold net, leaving Vietnamese stocks sluggish ahead of the US presidential election.

On November 4th, domestic stocks continued to fall, with the VN-Index losing more than 10 points, dropping close to the 1,240 mark. Circular 68/2024/TT-BTC, officially implemented to allow foreign institutional investors to buy shares without requiring sufficient funds, failed to stem the market's decline.

Brokers suffer losses, investors become discouraged.

Notably, the Vietnamese market was in the red while major global markets across Asia, Europe, and America were all in the green. This further discouraged domestic investors, leading them to cut their losses on stocks at low prices. As a result, the VN-Index closed at its lowest level since mid-September 2024. Liquidity remained low, with the trading value on the HOSE reaching only over 15,800 billion VND.

Investors and experts are hoping for a rebound in the stock market for the remainder of the year. (Photo: LAM GIANG)

According to MB Securities (MBS), average market liquidity has fallen to its lowest level in 7 weeks, at only about 16,380 billion VND. Excluding block trades, the trading value is only about 12,381 billion VND. The VN-Index lost its upward trend since the beginning of August at the 1,280 point level and has continued to search for a bottom for several weeks.

Many investors say that market developments and stock prices have not only been disappointing but have also caused them heavy losses. Mr. Hoai Minh (residing in Binh Thanh District, Ho Chi Minh City), who holds real estate and construction stocks, said that despite the positive Q3 2024 business results of the company he invests in, the stock price continues to fall.

"Real estate stocks have fluctuated within a narrow range for the past eight months, while infrastructure construction stocks have continuously declined, causing my account to spiral into increasingly heavy losses. Initially, I bought to average down the price, but about a month ago, I turned off the app and stopped trading," Minh recounted.

Many investors holding other stock categories such as securities, steel, and oil and gas are also facing a similar situation of "the more you buy, the more you lose" and have decided to stop watching the stock market. Ms. Doan Thi Thu Huyen, a consultant at Yuanta Vietnam Securities Company, said that the decrease in market liquidity and investors limiting transactions have directly affected brokers' income. "Typically, when the market is sluggish, investors become discouraged, and fewer people open accounts, it's a sign that the market is in the bottoming-out phase," Ms. Thu Huyen said.

Similarly, Mr. Tran Anh Giau, a broker at Mirae Asset Securities Company, also lamented that his income has recently decreased sharply because investors have stopped trading. "Vietnam's macroeconomic situation is positive, but the VN-Index hasn't risen, causing investors to feel apprehensive and discouraged from trading, leading to a sharp decrease in brokerage fees. Not to mention, many investors are stuck with unsold stocks and have to endure losses, which also puts pressure on the brokerage team," Mr. Giau explained.

A breath of fresh air from foreign investors.

Regarding Circular 68/2024/TT-BTC, which officially came into effect on November 2nd, allowing foreign institutional investors to trade shares without requiring sufficient funds and outlining a roadmap for disclosing information in English, reporters have observed that several major securities companies have begun implementing trading methods in accordance with the new regulations.

Mr. Barry Weisblatt David, Director of Analysis at VNDIRECT Securities Company, stated that the company is complying with the guidelines of the Vietnam Securities Depository and Clearing Corporation (VSD) and the directives of Circular 68 to receive clients and implement services as requested. VNDIRECT works with consulting firms belonging to major auditing groups to establish counterparty risk assessments for each client…

"This is an important circular because it demonstrates the government 's commitment to attracting foreign investment into the stock market, making Vietnam an attractive investment destination," said Barry Weisblatt David.

Circular 68 will encourage some fund managers to actively increase their allocations to Vietnam due to its more cost-effective investment potential. However, this impact is relatively small, as it will not affect allocations from funds like PYN, Dragon Capital, or VinaCapital, which have already invested 100% in Vietnam. The circular will primarily apply to regional funds or global funds specializing in frontier and emerging markets that are interested in Vietnam.

From the perspective of foreign investment funds, Ms. Nguyen Hoai Thu, General Director of Securities Investment at VinaCapital, said that many securities companies have already prepared trading procedures for foreign investors. However, it is necessary to ensure that this process is implemented smoothly in practice, without any glitches or impacts on the transactions of investors.

Securities companies also need to prepare sufficient capital to provide funds for investors' transactions. "Risk control for securities companies is also very important to avoid situations where foreign investors buy securities but then fail to make payments," said Ms. Hoai Thu.

Regarding the story of Circular 68 contributing to the roadmap for upgrading the Vietnamese stock market, a VinaCapital expert said that after the legal regulations and implementation procedures allowing foreign institutional investors to buy securities without having 100% cash available corresponding to the order value are in place, FTSE Russell will need to gather feedback from foreign investors currently investing in the Vietnamese stock market. Only if there are no obstacles can FTSE Russell make an official decision on upgrading the securities.

According to VNDIRECT experts, FTSE Russell is likely to announce an upgrade to emerging market status in March 2025. This announcement will positively improve market sentiment and the buying power of individual investors. Foreign ETFs tracking the Vietnamese market may increase their assets under management as foreign investors anticipate the emerging market upgrade, boosting stock prices in the first quarter of 2025. Although there are varying estimates, approximately $500 million to less than $1 billion in foreign capital will flow into Vietnam, especially into companies currently dominating the FTSE FM index.

Gold Talk Show, Stock Market

On the morning of November 5th, the Nguoi Lao Dong newspaper organized a talk show titled "Gold Reaches Peak, Stock Market Sluggish: Where Are the Opportunities?", with the participation of economic and financial experts analyzing the factors impacting the stock and gold markets currently and in the near future.

Has the market bottomed out?

Ms. Tran Khanh Hien, Director of Analysis at MBS, noted that although the USD index is fluctuating around 104 points, the State Bank of Vietnam has taken steps to inject net funds to support system liquidity amidst a strong increase in credit demand towards the end of the year. Lower interbank interest rates, signs of cooling exchange rates, and the appreciation of the VND against the USD, along with Circular 68, are factors that will positively support the market in the coming period.

"The domestic stock market typically experiences a fairly strong growth cycle from November to the end of February the following year. In the last two years, 2022 and 2023, the VN-Index bottomed out in November and initiated a strong recovery afterwards. The possibility of the US Federal Reserve (FED) lowering interest rates by another 0.25 percentage points at its November meeting; and stronger domestic disbursement of public investment capital and credit growth... also benefit the stock market," Ms. Khanh Hien analyzed.

Source: https://nld.com.vn/chung-khoan-ky-vong-lan-gio-moi-196241104205959133.htm