Foreign investors are selling shares despite VN Index's 33 percent gain, making it the best performing in Southeast Asia
For Bloomberg
Listed on Dec 10, 2021
Foreign investors have been shedding Vietnam shares throughout the year, despite a rise to record levels. Competition from popular retail stocks like Tesla Inc. and cryptocurrencies seems to be part of the reason.
Korean retail investors, who accounted for 16% of net foreign inflows between 2017 and 2019, are among those being sold, downloading net worth of $ 166 million shares so far this year, according to Custodian data. of Korea Securities. Its appetite for risk has shifted from emerging markets to the US, thanks to strong returns on speculative assets there, analysts say.
"Bitcoin and US stocks, especially tech growth stocks, showed big swings," said Lee Soyeon, market strategist at Korea Investment & Securities Co. "So investors were drawn to them, in Vietnam place. Stock trading is a bit tricky and returns have lagged. "
Foreign investors have posted outflows in all but one month this year, despite the 33% gain from the benchmark VN index, making it the best performer in Southeast Asia. In total, they have sold a record $ 2.7 billion worth of stock in 2021, according to data compiled by Bloomberg.
"Much of the overseas sales are just profit taking," said Stephen McKeever, head of the institutional clients division at Ho Chi Minh City Securities Corp. "The market has been strong and some investors have cashed in." and Korean retail investors turned their attention to US tech stocks like Tesla, he added.
Still, Vietnam watchers, including Jessica Tea of โโBNP Paribas Asset Management and Quynh Cao of SSI Securities Corp., see long-term positive fundamentals in the country's stock market and suspect foreign investors will return. Demographics, Vietnam's place in the Asian production chain and attractive valuations offer advantages to equity investors, they said.
"We believe that the net foreign sales that we have seen in the last two years do not necessarily reflect foreign investor sentiment towards Vietnam, which remains very positive," said McKeever of Ho Chi Minh City Securities. "We call this the paradox of feeling."
