Exchange rates and the story of commodity shortages.

It is estimated that, from the beginning of the year until now, foreign investors have net sold 85,000 billion VND on the HoSE, a record since the operation of the Vietnamese stock market. The main factors are believed to be exchange rate pressure and a lack of new, high-quality securities.

Record net selling of 85 trillion VND by foreign investors: Exchange rates and the story of commodity shortages.

It is estimated that, from the beginning of the year until now, foreign investors have net sold 85,000 billion VND on the HoSE, a record since the operation of the Vietnamese stock market. The main factors are believed to be exchange rate pressure and a lack of new, high-quality securities.

For approximately 20 consecutive months, foreign investors only temporarily stopped net selling in January 2024, and have net sold over 85,000 billion VND on the HoSE stock exchange since the beginning of the year.

Specifically on November 19th, on the HoSE exchange, foreign investors sold a net of 1,658 billion VND, with the heaviest selling pressure on VHM (-342 billion VND),FPT (-239 billion VND), and HDB (-208 billion VND)... The persistent selling pressure from foreign investors, coupled with cautious domestic capital flows, continued to put pressure on the index, causing it to fall by 11.97 points to 1,205 points. Liquidity on the HoSE remained low, at only 13,200 billion VND.

Experts believe that the main factors preventing the Vietnamese market from retaining foreign investment are exchange rate fluctuations and a lack of new, high-quality goods.

Regarding exchange rates, the depreciation of the VND against the USD impacts the performance of foreign funds, limiting their ability to attract capital. This trend is expected to continue.

According to the latest report from Dragon Capital, total USD deposits in the Vietnamese banking system are approximately $39.5 billion, down from $42 billion in 2022. Foreign exchange reserves have also decreased by more than $20 billion from their peak of $110 billion. Simultaneously, the upcoming maturity of $1.1 billion in international bonds, coupled with increased USD holdings by businesses and individuals, has created short-term pressure.

The latest report from KIM also suggests that Donald Trump's growth-supportive policies will strengthen the USD, putting significant pressure on the VND. At the same time, the pace and extent of the Fed's interest rate cuts may be limited by Donald Trump's proposals, and this scenario could restrict Vietnam's ability to further lower interest rates.

The longer-term and more fundamental issue is that the Vietnamese stock market lacks new, high-quality IPOs and listings.

In recent years, there have been relatively few "new faces" on the market, partly due to stricter IPO/listing approval procedures, and partly because the sluggish market has not been conducive to offering shares; in addition, the IPO roadmap for large-scale, efficiently operating state-owned enterprises remains very limited.

In reality, the stock market shows that many good companies, after their IPO/listing, are very well received by the market; the most recent example is the Viettel group of stocks, such as VTP, which currently has a three-digit market price, recording an impressive figure; similarly, CTR has also joined the club of companies with the highest market prices on the stock exchange...

At the Listed Companies Awards Ceremony, an event within the framework of the 2024 Listed Companies Conference held last weekend, Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission, stated that Vietnam's economy is an open economy, with total import and export value potentially exceeding 160% of GDP. However, what about our market? Although this year the absolute amount of foreign investor ownership in the Vietnamese market remains around $47 billion, in relative terms, foreign investors only hold about 16% of the total market capitalization.

"Compared to neighboring countries, this rate is very low, and compared to the level of openness of the Vietnamese economy, this figure is relatively narrow," Mr. Hai assessed.

According to Mr. Hai, to attract foreign investors, the Government has revised and amended procedures and regulations such as Circular 68… “However, conversely, when foreign investors enter the market, we need goods. The first issue is the ownership ratio of foreign investors; the ownership ratio in many businesses for foreign investors is zero, therefore foreign investors cannot participate,” Mr. Hai said.

Source: https://baodautu.vn/ky-luc-ban-rong-85000-ty-dong-cua-khoi-ngoai-ty-gia-va-cau-chuyen-thieu-hang-hoa-d230454.html