Foreign investors back in party mode

Ho Chi Minh Stock Exchange (HoSE) statistics show that this year to date, foreign portfolio investors have returned as net buyers of Vietnamese stocks. Since the start of February alone, foreign investors have been net buyers of over 25 million Vietnamese shares worth around VND550 billion ($26.6 million).

In January, foreign portfolio investors sold shares with a net value of VND2,058 billion ($99 million), but these sales was mainly via put through, focusing on STB (VND1,700 billion) and VIC (VND824 billion) as some strategic foreign investors liquidated.

But market analysts said this was a technical selling and did not represent the trading activities of foreign investors. If such trading was excluded, foreign investors were net buyers of VND340 billion ($16.4 million) worth of Vietnamese stocks in January.   

The latest moves by foreign portfolio investors are a surprise as they contrast with 2011 when these investors remained net sellers of Vietnamese equities amidst fear of massive liquidations by Vietnam-dedicated foreign investment funds.

Tran Tan Dat, head of Ho Chi Minh City Securities Corporation (HSC) Brokerage Department, said the cash inflows were coming from both new investment foreign funds and existing funds in Vietnam.  

“We have heard that new foreign investment funds focusing on emerging markets and low market capitalisation stocks are entering Vietnam. These funds consider Vietnamese stocks very attractive now while macro fundamentals are improving, [and this is] pushing investors to buy,” he said.

Dat added that besides new foreign investors, existing investors who sold heavily in 2011 were now holding too much cash. “BVH, CTG, DIG, DPM, HAG, HPG, VCB are among the favourite stocks of foreign investors.”

Pham Thanh Thai Linh, chief analyst with Bao Viet Securities (BVS), said the trading values of foreign investors were not high but their presence was positive amidst low market liquidation. “Foreigners’ trading will be encouraging news to domestic investors who are still hesitant,” said Linh.

But, Linh noted foreign investors’ net buying did not mean a positively sustainable medium-term outlook. Global risks like the euro zone public debt issue remain.

Dat said when the short-term market rally turned into a positive medium outlook, there would be new cash inflows by foreign investors. “The Vietnamese economy is changing from “very bad” in the past few months into “less bad” with inflation and interest rates cooling down. That will be positive for foreign portfolio investors,” he said.       

In a related development, HoSE has selected 30 Vietnamese stocks to introduce on ASEAN market via www.aseanexchanges.com. These include 15 on HoSE: STB, VIC, SSI, MSN, FPT, HAG, KDC, EIB, DPM, VNM, REE, OGC, IJC, VCB and PNJ. There are also 15 from the Hanoi Stock Exchange: ACB, DBC, HBB, KLS, NTP, OCH, PGS, PLC, PVI, PVS, PVX, SCR, SHB, VCG and VCS.