Foreign investors continue to be net sellers in stock market

The total net sales by foreign investors under the order-matching mode since the beginning of February reached VND10.6 trillion, twice as much as the net purchase of VND5.3 trillion in January as reported by SSI Retail Research. 

The capital flow through ETF has not been withdrawn, but analysts don’t think the strong inflow earlier this year will be seen again. 

A report shows that foreign investors’ capital which flowed to Vietnam through M&A deals in the first four months of the year was US$2.26 billion, increasing by 67% yearly.

The capital helps stabilize the macroeconomy, but it has little impact on the stock market.

On May 22, the stock market witnessed a sharp decrease of shares with large capitalization value on both the Hanoi (HNX) and HCMC (HOSE) bourses. Even shares belonging to top 10 companies with largest capitalization value could not find buyers. 

The capitalization value of HOSE lost VND88 trillion, or US$3.85 billion, just after one trading session. Meanwhile, foreign investors sold more than bought by 9 million, worth VND600.47 billion.

On May 23, the stock market closed with green lit electronic boards, but foreign investors once again had high net sales of 4.19 million, worth VND675 billion on HOSE. 

 A similar thing happened on May 24, but the net sales were lower, 4.32 million shares, worth VND147 billion.

 SSI reported that the VN Index which once climbed to a high of 1,180 points on March 28 has lost 20% just over the last two months.

 According to Nguyen Duc Hung Linh, said foreign investors had continuously sold shares, while Vietnam’s stocks are overvalued.

 Foreign investors mostly sold shares with high capitalization value such as VIC, VCB, VJC and MSN, so the sale has had a big impact on the VN Index.

 Regarding stock valuation, the PE at the end of March was 21 much higher than the 5-year average level of 14.6 and 2016-2017 average level of 15.4. Vietnamese banks were expensive compared with other banks around the world.

 Linh said that there is clear evidence of close relations between big net sales by foreign investors since February and what is happening in the global finance market.

 Doanh Nhan Sai Gon also quoted sources as reporting that capital outflow can be seen in many countries, including in Asia such as Malaysia and Indonesia. 

 This has affected the investment viewpoints of investment funds pouring money into Vietnam.