Vietnam's stock market suffered the biggest monthly fall in the world in April, with the VN-Index on the HCM Stock Exchange losing 12.2% and the HNX-Index on the Hanoi Stock Exchange sliding 9.4%.
The market has moved within a narrow range in early sessions in May.
Alongside slumps of large-cap stocks, especially in the banking, securities and real estate sectors due to heavy profit-taking pressure (the benchmark VN-Index hit the all-time record high of nearly 1,200 points on April 6), a long net selling streak by foreign investors negatively affected the market.
On the main bourse in HCM City, foreign traders were net buyers of total VND1.6 trillion (US$70.6 million) in April, but if excluding the unexpected net buy value of over VND3.1 trillion on April 20, foreigners were net sellers of about VND1.5 trillion.
Their net selling streak extended to May with a total net sale value of almost VND2.6 trillion till May 9.
Statistics have shown that the market usually falls when foreign investors increase net selling, so the current state of foreign trade has ignited fears of a possible downtrend.
However, market insiders have forecast foreign net sells will likely end soon.
According to Cao Minh Hoang, investment director at IPA Securities Fund Management Company, foreign investors are restructuring their portfolios. For the last 10 years, each time foreign investors rearrange portfolios, the market suffers volatility and this provides a chance for them to disburse next-phase investment.
“I think Vitenam's securities market is still outperforming other markets at the moment,” Hoang was quoted as saying to financial website nhipsongkinhte.vn.
Meanwhile, Duong Van Chung, director at MB Securities Co’s northern area, reckoned foreign investors may be raising capital to prepare for big deals like share sales of Techcombank and Vinhomes.
Besides, many foreign traders are speculative investors like exchange-traded funds (ETFs) who usually have quick response to international fluctuations such as Fed’s interest hike, he said.
Nguyen The Minh, head of analysis at Yuanta Securities Vietnam Co, said current net sells by foreign investors was partly affected by short-term concerns such as possible exchange rate hike under pressure of strengthening of the US dollar as well as political risks like the US-China trade spat.
However, according to him, foreign moves were not a worry at this time as Vietnam's macroeconomic situation remained stable and overall foreign investor sentiment is still optimistic about the local medium- and long-term market outlook.