11.12.2022, 10:46

Foreign investors seize stock market opportunities


In November, when the VN-Index fell into the 870-point zone, foreign investors quickly poured capital into the Vietnamese stock market, buying nearly $739.13 million.

On a talkshow about choosing an investment portfolio, themed "Driving force from foreign capital flow," hosted by VIR on December 9, Tran Thang Long, analysis director of BIDV Securities Company, said the speed of foreign investors' net buying on Vietnam's stock market was unprecedented in recent times.

Through meetings with foreign investors, Long said they had returned to eye Vietnam's stock market after a long time being affected by the pandemic. Many foreign investors have generally expressed positive assessments of Vietnam's stock market.

Although local investors raise concerns about the bond market, credit, and liquidity, foreign investors with a relatively long-term perspective, still make investment decisions based on the macro situation, potential, and prospects of the Vietnamese economy in the next 5-10 years.

Long said that the 870-point zone that the VN-Index fell into was very low. This level is less than twice the 5-year standard deviation average of Vietnam's stock market valuation, which has been rare in the past but presents opportunities in the long run.

“Foreign investors saw opportunities to invest in Vietnam. Valuation on Vietnam’s stock market was cheap not only in the last 2-3 years but also in the last 5 - 6 years," said Long.

Quan Duc Hoang, chairman of A+ Fund, pointed out that professional investors usually look at the market from two perspectives. The first is the real value, the market's confidence in the economic outlook. The second is Vietnam's economic growth, which is expected to maintain a growth momentum of more than 7 per cent or even 8 per cent in the coming years.

Currently, the P/E is at a record low after the VN-Index plunged recently. This adjustment of the Vietnamese market is deeper than in 2011 because the breadth of the market has been much larger. Hoang said that this is an opportunity for investors. Foreign investors should also consider seeing economic growth and stable politics in Vietnam.

According to BSC’s study, foreign investors in the Vietnamese stock market are divided into four main groups.

The first group is long-term investors. Over half of the Vietnamese stock market's $50 billion foreign investors is owned by long-term investors, strategic investors in businesses, and banks in the market. These investors usually hold shares for a long time. They even buy additional shares when companies raise funds by issuing or selling partners' shares.

The second group is investors from Europe, usually funds that concentrate most of their assets, up to 70-80 per cent, or even 90 per cent, in Vietnam. This group is closely linked to the development of the Vietnamese market. They will immediately invest in Vietnam when they mobilise from outside investors.

The third group is index funds, which account for more than 10 per cent of shares held by foreign investors on the Vietnamese stock market. This group operates flexibly. They will buy stock in Vietnam if they get a lot of fund certificates from outside, and vice versa.

The fourth group is investors through participatory notes (P-notes). They buy quickly and then sell quickly based on observing many markets. This group will trade more when buying and selling on the market, while the remaining groups are quite stable.