Foreign investors interested in Vietnamese stock market

Illustrative image (Photo: VNA)

During the year, they net bought over 7.51 trillion VND (323 million USD) worth of stocks and fund certificates, and more than 13.73 trillion VND (591.5 million USD) worth of bonds.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) finished 2019 at 960.99 points, up 7.7 percent from the previous year, the highest growth recorded in the Southeast Asian region.

With 1,622 listed shares and fund certificates on HoSE and the Hanoi Stock Exchange, the scale of the stock market reached nearly 1,402 trillion VND (60.36 billion USD), picking up 16 percent as compared to the end of 2018.

The stock market capitalisation increased 10.7 percent against 2018 to reach over 4,384 trillion VND (188.73 billion USD). The value was equivalent to 79.2 percent of the country’s gross domestic product (GDP) in 2018, and 72.6 percent of the GDP in 2019.

Brokerages expect the stock market will lure more foreign capital in 2020.

Foreign trading activities are forecast to increase this year thanks to many supporting factors, especially exchange-traded funds (ETFs), according to Viet Dragon Securities Company (VDSC).

In the past two years, the E1VFVN30 ETF and VNM US ETF were the two main capital-attracting ETFs of the Vietnam stock market. It is likely that E1VFVN30 will continue to attract cash flow from its two key investors, Thailand and the Republic of Korea, because the interest rates in these two countries are at low levels after the two local central banks made rate cuts last year, VDSC said.

The HOSE introduce new indices that contain foreign-ownership-capped shares in November last year, including VNDiamond, VNFin Select and VNFin Lead. According to Saigon Securities Company, many large fund management organisations such as SSIAM, VFM and VinaCapital all plan to launch ETFs based on new indexes implemented by HOSE.

The stock market is forecast to boom in the near future as foreigners are now able to invest more in their preferred stocks, thus luring foreign capital inflows into the Vietnamese market.

SSI Fund Management Company (SSIAM) is completing procedures to launch SSIAM VNFin Lead ETF, simulating the movement of financial stocks. VietFund Management (VFM) is also preparing for the launch of its two new ETFs based on the VNDiamond index.

Market experts also forecast that foreign capital inflows could improve in 2020 thanks to a number of external factors, such as the cooling of US-China trade tensions and the pestment and equitisation process of State-owned enterprises in 2020.