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Foreign investors flee market after devaluation takes toll on portfolios
Foreign investor behaviour on the nation's stock exchanges is drawing increased attention, especially since last week's devaluation of the Vietnamese dong against the US dollar may have eaten into the real value of many foreign investment portfolios.
Foreign investors were net sellers for a fifth consecutive trading day yesterday, selling a net of 371,530 shares on both markets – a shift that was beginning to become unusual, suggested the deputy director of the Securities Research and Trading Centre, Ton Tich Quy.
The new foreign exchange rate, which was believed to have boosted the flow of capital overseas, could bring high risks even though it was necessary, Quy said.
Some reports, issued in late January, showed that foreign investors were tending to withdraw capital from emerging markets, although Viet Nam had not been included on the list of markets shedding investors.
Foreign investors poured about VND190 billion (US$9 million) per day in December, a figure which fell to VND146.2 billion ($6.95 million) per day last month.
The average in six sessions in February fell to only VND103.1 billion ($4.9 million).
Le Tuan Anh, Chief Economist of Dragon Capital, told ndhmoney.com that the change in the foreign exchange should, over time, help stabilise the economy and create a stronger investment environment. But, combined with an inflation rate of about 12 per cent, it was uncertain whether overseas capital would return to local markets, Anh said.
"A net sale by foreign investors doesn't say anything by itself," said an independent analyst. "But it's hard to say that overseas capital will increase if market regulators don't do anything to address foreign exchange issues."
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