Thailand
Vietnam continues to see net foreign inflows despite global volatility
The Hanoitimes – Foreign direct and indirect investment inflow to Vietnam has still maintained growth though many other Asian markets have suffered a significant capital withdrawal in the wake of the US Treasury’s interest rate hikes.
According to statistics from the State Securities Commission (SSC), from the beginning of this year to the end of October 9, net foreign flows into Vietnam inched up to US$2.89 billion, nearly equal to the total figure of US$2.92 billion in the entire last year.
SSC’s chairman Tran Van Dung said that the number is a good sign compared to the current situation of capital withdrawal from other Asian markets. From the beginning of the year, foreign investors have withdrawn from seven Asian markets including South Korea, Thailand, Indonesia, the Philippines, India, Taiwan and Malaysia with a total value of US$27.34 billion.
As of October 9, the value of foreign investment portfolios in Vietnam was estimated at US$36.3 billion, rising by US$3.5 billion against US$32.8 billion at the end of 2017.
Trading activities of foreign investors remain busy recently. Particularly in September, foreign investors were net buyers of VND764 billion (US$32.6 million) worth of shares, fund certificates and bonds.
From early October to the end of October 9th, foreign net buying value reached VND10.2 trillion (US$435.89 million).
According to Dung, Vietnam’s success in maintaining a GDP growth rate of 6.7 percent, which was recently forecast by most large organizations, is very supportive information for investors.
Besides, Managing Director of Maybank Kim Eng Jeffrey Goh said that it is positive for Vietnam as it is also preparing to be upgraded to “emerging market” status from its current “frontier market” level.
A recent decision to add Vietnam onto FTSE Russell’s watch list for a possible future reclassification by the UK-based data service provider will have positive impacts on the foreign inflows to the country as the action will help enhance investor confidence and their short-term trading strategies may be changed to prepare for the portfolio shake-ups of exchange-traded funds (ETFs), analysts of BIDV Securities Co said.
According to the analysts, FTSE Russell’s action will make foreign investors focus more on both Vietnam’s stock market and Vietnamese firms, forecasting new capital sources will flow in the market to seize potential opportunities before it is upgraded officially.
Major improvements on the cards
Le Hai Tra, who is in charge of the Ho Chi Minh Stock Exchange (HOSE), said that Vietnam is committed to achieving the upgrade and is proposing major changes to its Securities Law next year to make this happen. Comments from ratings agencies like FTSE Russell are part of the proposed adjustments.
“We need to maintain what the market has already done well and vastly reduce setbacks. We plan to increase market access for foreign investors by providing details on foreign ownership, introducing intra-day trading and margin lending. We want to regulate risks and protect investors,” Tra said.
To fine-tune the legal regulations, SSC has recently also met with representatives of 13 investment funds, including Dragon Capital, Vinacapital, Flanklin/Templeton HK, HSBC Global Asset HK and PXP Vietnam Asset Management, to get their recommendations on the revised Securities Law.
At the meeting, the representatives discussed issues such as the allowance of non-voting depository receipts (NVDR) and full foreign ownership at public companies, besides securities margin transactions requirements, Securities Trading Code Registration procedures, regulations on the put-through transactions on both HOSE and Hanoi Stock Exchange, regulations on odd-lot trading on the HOSE and the involvement of foreign investors in IPO process in Vietnam.
SSC’s chairman Tran Van Dung said that the number is a good sign compared to the current situation of capital withdrawal from other Asian markets. From the beginning of the year, foreign investors have withdrawn from seven Asian markets including South Korea, Thailand, Indonesia, the Philippines, India, Taiwan and Malaysia with a total value of US$27.34 billion.
As of October 9, the value of foreign investment portfolios in Vietnam was estimated at US$36.3 billion, rising by US$3.5 billion against US$32.8 billion at the end of 2017.
Trading activities of foreign investors remain busy recently. Particularly in September, foreign investors were net buyers of VND764 billion (US$32.6 million) worth of shares, fund certificates and bonds.
From early October to the end of October 9th, foreign net buying value reached VND10.2 trillion (US$435.89 million).
According to Dung, Vietnam’s success in maintaining a GDP growth rate of 6.7 percent, which was recently forecast by most large organizations, is very supportive information for investors.
Besides, Managing Director of Maybank Kim Eng Jeffrey Goh said that it is positive for Vietnam as it is also preparing to be upgraded to “emerging market” status from its current “frontier market” level.
A recent decision to add Vietnam onto FTSE Russell’s watch list for a possible future reclassification by the UK-based data service provider will have positive impacts on the foreign inflows to the country as the action will help enhance investor confidence and their short-term trading strategies may be changed to prepare for the portfolio shake-ups of exchange-traded funds (ETFs), analysts of BIDV Securities Co said.
According to the analysts, FTSE Russell’s action will make foreign investors focus more on both Vietnam’s stock market and Vietnamese firms, forecasting new capital sources will flow in the market to seize potential opportunities before it is upgraded officially.
Major improvements on the cards
Le Hai Tra, who is in charge of the Ho Chi Minh Stock Exchange (HOSE), said that Vietnam is committed to achieving the upgrade and is proposing major changes to its Securities Law next year to make this happen. Comments from ratings agencies like FTSE Russell are part of the proposed adjustments.
“We need to maintain what the market has already done well and vastly reduce setbacks. We plan to increase market access for foreign investors by providing details on foreign ownership, introducing intra-day trading and margin lending. We want to regulate risks and protect investors,” Tra said.
To fine-tune the legal regulations, SSC has recently also met with representatives of 13 investment funds, including Dragon Capital, Vinacapital, Flanklin/Templeton HK, HSBC Global Asset HK and PXP Vietnam Asset Management, to get their recommendations on the revised Securities Law.
At the meeting, the representatives discussed issues such as the allowance of non-voting depository receipts (NVDR) and full foreign ownership at public companies, besides securities margin transactions requirements, Securities Trading Code Registration procedures, regulations on the put-through transactions on both HOSE and Hanoi Stock Exchange, regulations on odd-lot trading on the HOSE and the involvement of foreign investors in IPO process in Vietnam.
Source: http://www.hanoitimes.vn/investment/2018/10/81E0CE4C/vietnam-continues-to-see-net-foreign-inflows-despite-global-volatility/