Despite a strong start to the year with net inflows, major ETFs in Vietnam recorded a total net outflow of VND 1,022 billion by the end of 2023. According to Mr. Nguyen Ba Khuong, an analyst at VNDIRECT Securities, in December 2023 alone, the outflow was nearly VND 1,361 billion. The majority of this was due to net outflows from the DCVFMVN Diamond ETF (VND 1,159.2 billion), SSIAM's VNFIN Lead ETF (VND 557 billion), and the VanEck Vectors Vietnam ETF (VND 131.5 billion).
Conversely, the Fubon FTSE Vietnam fund and the KIM Growth VN30 fund recorded net inflows of VND 458.7 billion and VND 33.8 billion, respectively.
To be more specific, over the past year, the Fubon FTSE Vietnam ETF has continued to thrive thanks to net buying despite foreign investors generally selling heavily on the Vietnamese stock market. As of January 8th, the fund had issued a net 2 million fund units, equivalent to approximately $0.7 million. The issuance of the Fubon ETF amounted to approximately VND 18 billion, and the entire amount was used to purchase Vietnamese stocks.
In other news, foreign investors increased their net selling activity in December 2023, with a net selling value of over VND 10,096 billion. This was also the month with the highest net selling value in 2023 by foreign investors, nearly three times higher than the net selling value of the previous month. The stocks they sold most heavily in the last month of the year included VHM, HPG, FUEVFVND, VNM, STB, VCB, and VPB. Conversely, the stocks they bought most heavily were MWG, VHC, BID, NVL, NKG, and CMG.
"Thai investors played a major role in the net selling by foreign investors in December 2023. Thailand enacted a new tax law, which will raise the tax rate on foreign income from January 1, 2024. Therefore, Thai investors sold and repatriated their assets before 2024 to avoid being subject to this new tax rate," Mr. Khuong explained.
Furthermore, according to analysts, the net outflow also stems from the interest rate differential between the domestic currency and the USD. Specifically for the DCVFM VNDiamond ETF (which experienced net outflows of nearly 3,700 billion VND), the reasons also include some stocks having reached their investment limits, listed companies performing poorly, and bank stocks becoming less attractive.
According to experts from SSI Research, in the medium term, investment flows into the Vietnamese stock market may benefit from capital shifting to developing markets. However, this will usually only occur after the Fed begins cutting interest rates. In the short term, the attractiveness of Vietnamese stocks to Thai and South Korean investors may be affected by new regulations/plans from their respective governments aimed at boosting their domestic stock markets.
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