Vietnam’s stock market expects more foreign capital inflow in 2019


VietNamNet Bridge – Foreign capital inflow to Vietnam was still higher than outflow by $1.8 billion, or VND41 trillion, an increase of 60 percent over 2017


The downward trend has been seen in all global stock markets since December 2018. And the same iccurred in Vietnam: securities rushed to sell stocks and trading sessions closed with electronic boards in red.

According to Doanh Nhan Sai Gon newspaper, the VN Index fell in 17 out of 20 recent trading sessions as of January 3, dropping to below 880 points.

However, despite the consecutive correction sessions, foreign investors have been net buyers in the last seven trading sessions on the HCM City Stock Exchange, valued at VND1.027 trillion in total.

Analysts believe that foreign investors’ interest in Vietnam’s stocks is a positive sign.

Vietnam was the most successful Southeast Asian market in 2017 in capital mobilization. The funds raised through share and corporate bond issuance, and the state’s capital divestment in 2018 reached VND62.2 trillion, an increase of 30.7 percent compared with 2017.

While many economies declined last year and showed signs of uncertainties, Vietnam continued with stable growth and good macroeconomic indexes.

The General Statistics Office (GSO)  reported a 10-year high GDP growth rate at 7.08 percent for 2018, while the inflation rate was curbed at 3.54 percent, and the dong depreciation was lower than 2 percent.

As for FDI, the disbursed capital was $19.1 billion, or $9.1 billion higher than 2017. The trade surplus climbed to its highest level, at $7.2 billion.

Some international institutions predicted that the investment flow may return to other emerging and developing markets in 2019 after a sharp period of decline.

Meanwhile, the US Federal Reserve (FED) is likely to slow down the interest rate increase plan in 2019.

In such conditions, Vietnamese investors hope foreign capital flow will head for Vietnam as a potential destination, especially when the P/E index in Vietnam has entered the attractive area of below 16x, which means Vietnam’s stocks have become cheaper than other regional markets such as the Philippines, Malaysia and Indonesia.

Vietnam has a big advantage in luring foreign capital: it is looking forward to being upgraded from frontier to secondary emerging market.

In 2018, FTSE Russell put Vietnam on the watchlist for an upgrade to an emerging market. The emerging market status is crucial to Vietnam’s attractiveness to major foreign investors.


Photo: VAM