Source: Zhitong Finance
Although Vietnam's stock market has hit a record high this year, foreign investors have been selling off Vietnamese stocks. Competition from popular retail stocks such as Tesla inc. and cryptocurrencies appears to be one of the reasons.
According to the Korea Securities Depository, South Korean retail investors are also selling stocks, which have net sold $166 million so far this year. From 2017 to 2019, South Korean retail investors accounted for 16% of Vietnam's net foreign inflows. Analysts say their risk appetite has shifted from emerging markets to the United States due to strong returns on speculative U.S. assets.
Korea Investment & Securities Co. Market strategist Lee Soyeon said: "Bitcoin and U.S. stocks, especially technology growth stocks, have fluctuated significantly. "So it's them, not Vietnam, that attracts investors." Stock trading in Vietnam is a bit complicated and returns are lagging behind. ”
Since the beginning of this year, there has been almost no exception to capital outflows from overseas investors in Vietnam, except for a month, although the benchmark VN Index rose 33 percent to become the best performing index in Southeast Asia. Data collected by Bloomberg shows that in 2021, they sold a total of $2.7 billion worth of stock, a record number of all.
Stephen McKeever, head of institutional clients at Ho Chi Minh City Securities Company, said, "A lot of foreign investors sell stocks just to make a profit. "The market is performing strongly, some investors have cashed out," South Korean retail investors turned their attention to U.S. tech stocks like Tesla.
Still, Vietnamese observers, including Jessica Tea of BNP Paribas Asset Management and Quynh Cao of SSI Securities, see long-term fundamentals in Vietnam's stock market as positive and doubt that foreign investors will return to Vietnam. They said demographics, Vietnam's position in Asia's production chain and attractive valuations provide upside for equity investors.
McKeever said, "We believe that the net sell-off by foreign investors over the past two years does not necessarily reflect the confidence of foreign investors in Vietnam, which remains very optimistic." "We call it the emotional paradox."