Foreign investors withdraw from regional stock markets to flock to Vietnam

2018 is a special year for the stock market in Vietnam when investors saw VN Index set a new peak after 10 years and then suddenly plunged in a short time.

After the year-end trading session, VN Index stood at 892 points, lower than 958 points of 2017. After a long growth period from 2016, concerns about global economic growth and non-positive information from FED's monetary tightening policy or US-China tensions are worrying investors in Vietnam’s stock market.

Although most of the time of the year, VNIndex is in a downward trend, there are still positive signs, most notably the foreign investors have continuously invested in the stock market.

This goes on despite the withdrawal of foreign investment funds from emerging markets in the region such as the Philippines, Indonesia, Thailand, Malaysia or India.

Specifically, statistics of foreign transactions at Ho Chi Minh City Stock Exchange (HOSE) showed that from the beginning of the year to December 21, 2018, foreign investors about VND41 trillion ($1.8 billion) worth of Vietnamese equities in net value.

Meanwhile, stock markets of neighbouring countries in 2018 have seen steep withdrawals of foreign investors. Thai market saw foreign net sales of $8.8 billion in the year; this figure was $1 billion in the Philippines and $2.8 billion in Malaysia according to data from Bloomberg.

The foreign net purchase on Vietnam's stock market is accompanied by IPO deals of Vietnam's largest enterprises.

Right after shares of Vinhomes, a member of Vingroup, were offered for sales on May 17, foreign investors spent $1.35 billion USD to acquire VHM shares, making the first trading session worth over $1 billion USD in nearly 20 years of stock market development.

Or more than 164 million shares of Vietnam Technological and Commercial Joint Stock Bank (Techcombank), equivalent to 14 per cent of the bank's charter capital were sold at $922 million to foreign investors.

Korean investors are one of the most dynamic investors on the Vietnamese stock market. In October, SK Group of Korea spent $470 million USD acquiring all 110 million treasury shares of Masan, equivalent to 9.5 per cent of the total voting shares of this group.

According to CNBC, Vietnam unseats Singapore as the largest IPO fundraiser in Southeast Asia. Specifically, Vietnam leaped to the top of Southeast Asia’s IPO ranking with five IPOs raising $2.6 billion. Singapore finished the year with 13 deals that raised around $500 million — the fourth highest IPO proceeds in Southeast Asia behind Vietnam, Thailand and Indonesia.

Large-scale deals of foreign investors help Vietnam stock market more and more highly valued. FTSE Russell has added Vietnam to the watch list for possible upgrade to Secondary Emerging Market, which will have positive impacts on the Vietnamese stock market.