Foreign cash flows remain high despite continuous net selling

Foreign cash flows remain high despite continuous net selling.

Even though foreign investors have become net sellers on the stock market, they have fled to bonds and are waiting for future investment opportunities, said Trần Văn Dũng, Chairman of the State Securities Commission of Việt Nam (SSC).

In the first nine months of the year, foreign investors net sold nearly VNĐ30.2 trillion (US$1.3 billion) on the country’s stock market. Of which, foreign investors net sold over VNĐ40.3 trillion of shares and net bought VNĐ10.1 trillion of bonds.

Compared to the international market, the net selling value of foreign investors on Việt Nam’s stock market is lower than that of other countries in the region.

In a press conference, the chairman of SSC said that the net selling was due to a number of factors such as the impact of COVID-19 and profit-taking on portfolios that have been disbursed in 2019 and 2020 after the stock market price surged.

However, he also said that foreign investors net sell on the stock market, but buy bonds and wait for further investment. Statistics showed that the cash proportion in the total portfolio value of foreign investors has remained relatively stable, which has been at high levels since the beginning of the year.

On the other hand, even though foreign investors withdrew capital from Việt Nam, the accumulated outflow value from the beginning of 2021 until now has only accounted for 0.8 percent of the total portfolio value of foreign investors and is lower than the net selling value of foreign investors on the stock market. This showed that the net selling activities of foreign investors are partly to restructure their portfolios, not entirely to flee from the market.

Việt Nam is holding many advantages to attract foreign capital as the COVID-19 pandemic can be well contained in the near future, Dũng added.

They have significantly improved the legal and business environment. The Law on Enterprises, the Law on Investment, and the Law on Securities, which were put into effect from 2021, have made the investment and business environment more transparent and complete.