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Vietnamese Stock Market Faces Pressure Amid Global Shifts

Strategic Insights

— 2 min read

The Vietnamese stock market is under significant pressure as global investment trends shift, leading to substantial capital withdrawals from exchange-traded funds (ETFs) and foreign investors. Despite this challenge, analysts remain optimistic about the medium- to long-term outlook, particularly regarding the potential for a market upgrade. The recent strategic report from SSI Securities highlights the notable outflow of funds from Vietnamese ETFs in August, with net withdrawals reaching VNA 4.47 trillion (US$169.3 million).

Key Takeaways:

  • The total net withdrawal from ETFs since the beginning of the year has amounted to VNA 12.6 trillion, with VNA 3.7 trillion attributed to domestic ETFs and VNA 8.8 trillion from foreign funds.
  • Domestic ETFs, which had previously attracted significant inflows in July, returned to a net withdrawal state in August, amounting to VNA 1.9 trillion.
  • The DCVFMVN Diamond ETF led this trend with a net outflow of VNA 1.1 trillion, signalling a significant reversal compared to the previous month.
  • Foreign ETFs also experienced substantial net withdrawals, totalling VNA 2.5 trillion in August, with the Fubon FTSE Vietnam ETF recording the largest outflow with VNA 2.3 trillion.
  • Investor sentiment remains cautious, with foreign investors exerting considerable selling pressure in August, resulting in a net selling value of VNA 42.7 trillion.
  • Experts from SSI believe that the medium- and long-term prospects for the Vietnamese market remain positive, driven by anticipation of a potential upgrade from FTSE and MSCI, expected double-digit GDP growth, and comprehensive institutional reform.
  • The recent introduction of new indices by the Ho Chi Minh Stock Exchange (HoSE) could provide additional momentum, and analysts are optimistic that Via ++t Nam will soon see a resurgence of foreign capital inflows.
  • On October 7, FTSE Russell is set to release its classification report for national stocks, with Via ++t Nam currently classified as a frontier market and under consideration for an upgrade to emerging market status.

Statistics:

  • Net withdrawals from Vietnamese ETFs in August: VNA 4.47 trillion (US$169.3 million)
  • Total net withdrawal from ETFs since the beginning of the year: VNA 12.6 trillion
  • Domestic ETFs net withdrawal in August: VNA 1.9 trillion
  • Foreign ETFs net withdrawal in August: VNA 2.5 trillion
  • Net selling value of foreign investors in August: VNA 42.7 trillion
  • Year-to-date net selling by foreign investors: VNA 77.7 trillion
  • Potential inflows from passive funds if FTSE upgrades Via ++t Nam: around US$1.5 billion
  • Potential total inflows from FTSE upgrade in the most optimistic scenario: up to US$10.4 billion

Sources:

  • SSI Securities: Strategic report on the Vietnamese stock market
  • HSBC: Recent report on potential FTSE upgrade and its implications for the Vietnamese stock market
  • FTSE Russell: Classification report for national stocks (scheduled for October 7)

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