|
Foreign investors in or out?
Whether or not foreign investors will withdraw capital from the stock market remains a hot topic, though state management agencies affirm there is nothing to worry about.
While state officials affirm that a massive withdrawal of capital from the stock market will not occur, some experts say Vietnam should prepare for the worst. The contradictory viewpoints have been pulling investors in different directions.
Foreign investors sell more than purchase
Statistics show that foreign investors have been selling stocks continuously since September. In September, foreign investors sold stocks worth $116mil. The sale continues in October.
Foreign investors also sold a big volume of bonds worth several thousand billion VND. Investors have recently sold bonds to get VND despite the heavy losses due to bond price decreases.
The explanations for the foreigners’ net sale vary. Most analysts think that foreign investors are trying to restructure their investment portfolios in the new condition. It is now the right time to restructure investment portfolios as the stock market is falling and making stock prices cheaper.
The portfolio restructuring means that foreign investors do not withdraw capital from the market, they just simply shift their money from some stocks to others.
Meanwhile, other analysts believe that foreign investors are trying to sell bonds to get money to transfer home to help financially strengthen their parent companies. Some others think that foreign investors want to take back money to make investments in other markets, where the stock prices are also very cheap and attractive.
However, this argument is not too likely. If foreign investors wanted to transfer money abroad, they would be buying dollars, leading to a sharp increase in the demand for dollars. Meanwhile, no considerable increase in the demand for dollars has been reported. The VND/US$ exchange rate quoted by commercial banks has been hovering around VND16,600/US$1 for the last few weeks, though the State Bank tried to raise the interbank exchange rate in an effort to stimulate exports.
Saving up money to prepare for new investments?
Securities companies have given an absolutely different explanation about the sale by foreign investors. They say that foreign investors are anticipating the recovery of the stock market, and trying to collect money to purchase more securities.
According to the companies, most investment funds in Vietnam are closed funds, which do not allow investors to withdraw capital easily.
Moreover, the investors who purchased stocks when the prices were high would ‘lose everything’ if they sold stocks now and quit the market. The investors are trying to restructure the portfolio investment: they are selling stocks now and plan to purchase stocks when the prices fall more deeply. By ‘sinking themselves’, investors will be able to purchase more stocks and get fat profit when the market recovers.
The investors prove to have every reason to believe in the recovery of the stock market. Bank deposit interest rates are tending to decrease, while stock prices are at low levels, and the problems of the national economy are being resolved.
VNN
|
