Despite reaching new highs, foreign investors have been selling Vietnam stocks all year. Part of the cause appears to be competition from popular retail equities like Tesla Inc. and cryptocurrencies.
According to data from the Korea Securities Depository, Korean retail investors, who accounted for 16 percent of net foreign inflows between 2017 and 2019, are among those selling out, dumping a net $166 million worth of shares so far this year. Their risk appetite has migrated from emerging countries to the United States, owing to excellent returns in speculative assets there, according to analysts.
“Bitcoin and US equities, particularly tech growth companies, have seen a lot of volatility,” said Lee Soyeon, a market strategist at Korea Investment & Securities Co. “As a result, rather than Vietnam, they attracted investors. The stock market is a little confusing, and returns have been slow.”
“A lot of the foreign selling is just profit taking,” said Stephen McKeever, head of Ho Chi Minh City Securities Corp’s institutional client division. “He said that “the market has performed well, and some investors have cashed out,” with Korean retail investors shifting their focus to U.S. tech equities like Tesla.
Nonetheless, observers such as Jessica Tea of BNP Paribas Asset Management and Quynh Cao of SSI Securities Corp. see positive long-term fundamentals in the country’s stock market and believe international investors will return. According to them, demographics, Vietnam’s position in the Asian supply chain, and good values provide opportunities for equity investors.
“We believe that the net foreign selling we’ve witnessed in the last two years isn’t necessarily reflective of foreign investor attitude toward Vietnam, which is still quite positive,” McKeever of Ho Chi Minh City Securities said.