Foreign investors increasingly keen on securities


The National Financial Supervisory Commission has recently released a report on the economic situation in the first quarter of 2017, which highlights an increasing trend among foreign investors to trade on Vietnam’s stock market.

This came amid a prominent event in March – the US Federal Reserve raising interest rates – and is likely to continue to increase in 2017. 

However, the Commission said that the impact of the US Fed’s interest rate policy did not significantly affect foreign investment into Vietnam, as the interest rate difference between VND and USD deposits remains in favor of holding VND.

In recent years, the stability of the USD/VND exchange rate has been an advantage for Vietnam in attracting and retaining foreign investors compared to many other countries in the region. 

The Commission stated that foreign investors continue to believe in Vietnam’s economic outlook and its stock market, as evidenced by continued net buying during March, which reached its highest level since the beginning of the year, at $303 million.

Total net buying by foreign investors since the beginning of the year stood at $554 million, including $418 million in bonds and $136 million in shares.

The total value of portfolios held by foreign investors was estimated in the report at $23.4 billion at the end of the first quarter, up 14.8 per cent since the end of 2016. 

Foreign ownership in the stock market is estimated at 19.2 per cent and 6.2 per cent on the bond market.

The report also noted that interest rates have fluctuated since early March. 

Liquidity in the banking system during the first quarter showed signs of slipping, mainly due to a lack of liquidity at some small commercial banks.

However, the State Bank of Vietnam (SBV) adjusted liquidity via open market operations (OMO), making a strong net injection in January, absorbing large amounts in February, and offering continued support in March. 

As at March 28, the central bank had pumped in some VND12 trillion ($529.3 million).


Photo: CBR Investment AG