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Foreign investors’ portfolios’ value down by US $4 billion
The value of foreign investors’ portfolios had been reportedly at US $4.6 billion in December 2008, down by nearly US $4 billion compared to the beginning of 2008, when the portfolios’ values were the highest, according to the State Securities Commission (SSC).
Dr. Nguyen Son, Head of the Market Development Division under SSC, said that in 2008 the capital flow went in and out flexibly in accordance with the stock market performance. The average capital flow in 2008 reportedly reached US $300 million a month, while the figure was US $880 million in October and US $350 million in November.
In the first months of the year, the purchase turnover of foreign investors was higher than the sales. Meanwhile, the net sales occurred in the last months of the year, especially the sales of bonds.
Also according to Dr. Son, though the portfolios’ value has decreased sharply, the capital volume withdrawn from Vietnam was not big. The stock prices have decreased by 70%, while foreign investors restructured their portfolios, putting parts of their capital in other investment channels, including real estate.
Son said that the reduction of the foreign investment capital flow in 2008 showed the influences of the economic events in the world. The sales by foreign investors increased in the last year, especially in Government bonds and high liquidity stocks.
The level of capital withdrawal has been high and low in the last few months, depending on the falls of the market.
The capital withdrawal has been limited due to the problems relating to the prices, liquidity, and the convertibility from domestic into foreign currencies. Moreover, two-thirds of the investment items are being held by close funds, therefore, the pressure on liquidating is not as high as open funds.
However, Son has warned that the foreign investors’ sales and capital withdrawal will certainly put pressure on the exchange rate. If Vietnam does not regulate the exchange rate well, this may lead to the fact that domestic investors withdraw money to convert into foreign currencies, raising difficulties for foreign currency reserves and banks’ liquidity.
VietNamNet, TBKTVN
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