|
Don’t panic because of foreigners’ net sales!
Securities companies all have advised domestic investors not to worry too much about the net sales of foreign investors in the last few trading sessions.
Foreigners’ transactions September 3 - October 22
|
Shares |
|
HOSE |
HASTC |
Total |
|
Trading volume |
Purchase |
74,100,070 |
18,048,800 |
92,148,870 |
|
Sale |
98,109,860 |
20,758,200 |
118,868,060 |
|
Net sale |
24,009,790 |
2,709,400 |
26,719,190 |
|
Trading value
(VND1,000) |
Purchase |
3,981,11,531 |
768,010,620 |
4,749,122,151 |
|
Sale |
4,644,236,363 |
716,590,770 |
5,360,827,133 |
|
Net sale |
663,124,832 |
51,419,850 |
611,704,982 |
Statistics show that foreigners’ bond net trading volume was 126,833,720 bonds during that time, including 6,000,000 bonds on the HCM City Stock Exchange (HOSE) and 120,833,730 on the Hanoi Securities Trading Centre (HASTC). Foreigners’ bond net trading value was VND11,696,227,744,000.
Foreign investors, like domestic ones, always tend to sell stocks to keep cash when there are problems in the world’s market.
The question “Will foreign investors withdraw money from the stock market?” is being answered by another question: “What will they do with the money?”
In fact, foreign investors do not have many reasons to withdraw money from stocks, as Vietnam is still considered a good market in Asia with the P/E index last week equal to that in the Singaporean and Malaysian markets. Meanwhile, Vietnam has the advantages of political stability and high economic growth, the highest rate in the region.
Tran Dinh Phong, Investment Director of VNDS Securities Company, said that investors should not be too worried about the big sales of foreign investors. If foreign investors sold all the stocks they are holding, estimated at 20% of the total market value, the shares would be absorbed by domestic investors. Phong said that wise investors now can begin purchasing good stocks. When the net sale movement weakens, foreign investors tend to purchase shares in big quantities, which helps stock prices recover.
TDH share is an example. Foreign investors continuously sold TDH previously, leading the share item to drop sharply to VND28,000/share. However, when foreigners stopped selling last Wednesday, and the information about internal shareholders registering to buy shares was announced, TDH bounced back.
Experts have every reason to believe that the capital withdrawal ratio will just account for a small portion of the total portfolio investment in Vietnam. Some companies said that after some senior investment funds in Vietnam sold shares of companies, newer funds purchased the shares.
Nguyen Hoang Anh, Deputy Chairman of National Assembly’s Economics Committee: Viewpoint that foreign investors are withdrawing capital from the stock market unconvincing
As far as I know foreign investors injected 50% of their money in government bonds. In all cases, I think, foreign investors will still hold government bonds. They will not be unwise enough to sell bonds, the safest assets in the context of the global financial crisis.
Many people are worried that foreign investors will sell out shares and fund certificates to escape from Vietnam. I think that this, if it happened, would not be bad for the stock market. The market, after the hot development period from mid 2006 to early 2008, has fallen down sharply to a level which could not be lower. If some foreign investors sell stocks, others will purchase.
If investors withdraw capital, this would not be catastrophic for the national economy since the capital the stock market can provide for the national economy remains modest. In 2009, the total investment capital is expected to be VND725tril, or 40% of GDP, much more than the capital the stock market can provide.
Nguyen Viet Anh, General Director of Vietcombank Investment Fund Management Company (VCBF): Foreign investors not withdrawing money because of Vietnam’s economy
The net sales by foreign investors are quite understandable. In the context of the global financial crisis, investors automatically think of restructuring their investment portfolios, withdrawing money from high-risks investments to inject money in safer channels. Maybe some foreign investors, both institutional and individual, are facing difficulties in their main markets, and they have to take back money to pay due debts. However, foreign investors are not withdrawing capital collectively because they do not value Vietnam’s economy.
This sale should be seen as the action of restructuring investment portfolios of the investors who are suffering from the global financial crisis. Other investors do not have the intention of withdrawing capital from Vietnam; but they also still have to think of quitting high-risk investments, and looking for safe investments with low costs.
All the investment funds now being managed by VCBF aim at medium- and long-term strategies. Therefore, temporary changes of the stock market do not affect our strategy and investment mode. VCBF is still injecting money in good companies. It plans to disburse some $100mil in the upcoming 15 months.
VNN
|
