Expectation of foreign capital is more positive in 2020

VCN- After a year full of fluctuations in foreign investors' transactions, it is forecasted that Vietnam will have the opportunity to attract foreign capital thanks to the development of new ETFs as well as the possibility of being upgraded to emerging market status.  
tin nhap 20200115101732 Foreign capital into Vietnam decreases but still very optimistic
tin nhap 20200115101732 Unknown of foreign capital
tin nhap 20200115101732 Foreign businesses accelerate indirect investment in Vietnam
tin nhap 20200115101732
The problem of private economic development together with market upgrading will make a difference to attracting foreign capital even when the overall context is not favourable. Photo: N.H

Fluctuations in foreign capital

Foreign investors were net buyers of more than 6.56 trillion dong on HoSE in 2019. However, the buying came from a few big M&A transactions with the highlight being SK's VIC purchase on May 21. The total value of the VIC buying agreements in this session reached more than 5.82 trillion VND, accounting for two thirds of net buying value through the whole year. With the matching channel, foreign investors net sold 1, 67 trillion dong in which most of the net selling value focused on the last five months (5.3 trillion dong), contrary to the trend of net buying in the first four months (2.8 trillion dong).

Because matching orders have great influence on stock prices, the market trend is similar. A positive point is that despite strong net selling pressure at the end of the year, the VNIndex did not return to the starting point. This was partly due to leading stocks such as VCB and BID seeing little net selling pressure. In the last five months, VCB was only net sold 156 billion dong and BID was net bought to the tune of 256 billion dong on the matching channel. Another reason is large-cap stocks with basic fundamentals like VNM came down to lower prices.

Compared to the trend of net buying and selling of foreign investors, cash flow through the ETF channel was more positive. ETFs continuously had cash inflows in the first seven months and the whole year ETFs brought relatively large net value. Per statistics with the three funds VFM VN30, Van Eck ETF and DB FTSE, total net buying value exceeded VND 5 trillion, of which VFMVN30 accounted for 47 percent.

The net buying trend of ETFs in some periods was different from emerging market capital. In June when ETFs in Vietnam had good cash inflow, EM funds had cash outflows. By the end of the year when emerging market management funds (EM funds) had strong cash inflows, capital inflows into ETFs in Vietnam were still slow. The "delay" of foreign capital flows through ETFs was one reason why the VN-Index was not able to break out like the MSCI EM Index.

Opportunity to attract capital in 2020

According to SSI Securities Company, capital flowed into emerging markets from October 2018 to February 2019 with a total of nearly US$40 billion. After three months of trade tensions, the "ceasefire" statement between the US and China is considered a starting point for positive sentiment and reversed capital flows.

SSI’s assessment for the current context is similar. The US and China certainly a phase one agreement. Capital inflows into stocks have begun to diverge between developed and emerging markets. On the way to conquering new highs of the US stock index, cash flow of funds into US stocks has never recorded three consecutive weeks of cash inflow. By the end of December, up to 23.6 billion USD was withdrawn from the US market, the highest amount in a year. In contrast, capital inflows into emerging markets recorded USD 21.2 billion in nine consecutive weeks in which the destinations were mainly global funds (GEM) and Asia (foreign), except Japan.

The monthly Bank of America Merrill Lynch (BAML) survey showed that global fund managers are more optimistic. In the December 2019 survey, up to 29 percent of 247 fund managers (with total assets under management of $745 billion) said the global economy 2020 would accelerate. The proportion of asset investment in stocks has increased continuously in the last four months of the survey, changing from 12 percent "less satisfactory" (August 2019) "to outstanding prospects" 31 percent (12/2019) - the highest level in 2019.

In addition to capital allocation of the global investment strategy, Vietnam's market in 2020 will witness many new ETFs that imitate the VN30 index as well as a set of three new indexes of the HOSE. Vietnam’s stock market is also being considered for upgrading by FTSE and there is the only one unsatisfactory payment criteria. If there are steps to clear this condition, foreign investors will very quickly seize the opportunity to enter Vietnam.

According to international investors, things that can make big changes in the economic or stock market will be an interesting story. In 2015, when China was likely to be upgraded to an emerging market, foreign cash flow poured into the country (although China has not been upgraded yet, so the cash flow has also slowed sharply). By the end of 2016, Brazil had a new president who had friendly ways with business, similar to the US with President Donald Trump. This has spurred capital inflows to Brazil and the US in 2017. “For Vietnam, combining the problem of private economic development with market upgrading will make a difference and so capital flows can be attracted even when the overall situation is unfavourable,” the report of SSI said.

By Khai Ky/Bui Diep

Related News

Coconut is expected to become a billion-dollar export item

Coconut is expected to become a billion-dollar export item

VCN - Talking to the press at the ceremony to launch the first train carrying fresh coconuts to China, Mr. Luu Van Phi, Director of the Department of Industry and Trade of Tien Giang province, said that Vietnam's agricultural export potential, especially fresh coconuts, is expanding with the appearance of international railway transportation from Song Than station.
Plastic exporters interested in converting to recycling technology

Plastic exporters interested in converting to recycling technology

VCN - The Vietnamese plastics industry is facing major challenges in terms of plastic waste and recycling needs. Secretary General of the Vietnam Plastics Association Huynh Thi My (pictured) shared important information about the transformation in production of plastics enterprises to meet increasing export demands.
Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countries, thereby maintaining advantages and developing on "away grounds".

Latest News

M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ceiling and safety threshold approved by the National Assembly, ensuring national financial security, increasing proactive response to risks arising from external and internal causes of the economy.
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

VCN - Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment; renovating, upgrading, expanding, and constructing new construction items in projects that have been invested in and constructed in the past.

More News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3.92%.
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

VCN - Discussing in groups about the project "1 law amending 7 laws" in the financial sector according to the program of the 8th Session on October 29, 2024, National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigned by the Prime Minister.
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
Rush to finalize draft decree on public asset restructuring

Rush to finalize draft decree on public asset restructuring

VCN - According to the Ministry of Finance, the draft Decree regulating the rearrangement and handling of public assets is being urgently completed by the Ministry of Finance to submit to the Government for promulgation.
Inspection report on gold trading activities being complied: SBV

Inspection report on gold trading activities being complied: SBV

The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled.
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

VCN -The Government estimates that state budget revenue in 2024 will exceed VND 172.3 trillion, up 10.1% over the estimate, of which tax and fee revenue will reach 13.1% of GDP.
Read More

Your care

Latest Most read
M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ce
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Mobile Version