In 2020, foreign investors continue their net buying trend on Vietnam’s stock market

17-Jan-2020 Intellasia | Nhip cau Dau tu | 7:02 AM Print This Post

KB Vietnam Securities Joint Stock Company (KBSV) stated that with more favourable conditions for the stock market in 2020, foreign investors were expected to continue net buying this year. According to KBSV, even if market conditions were not favourable in 2019, global capital inflows from emerging markets in the region, Vietnam’s stock market (along with Indonesia) would still be the attraction in the area for foreign investment.

In 2020, the launch of three new sets of indicators (VN Diamond, VNFIN Lead and VNFIN Select) would partly solve inadequacies for foreign investors because of regulations on ownership ratio through the disbursement of cockroaches into Exchange-Traded Funds (ETF) following these indicators. Besides, the inclusion of a depository receipt (DR) in the recent Securities Law and the fact that the DR had no voting rights (non-voting depository receiptNVDR) in the Enterprise Law showed that the government and regulatory agencies were quite strict in researching this product, but would still soon deploy them.

Besides new products to be added to the stock market in 2020, the expectation that the Financial Times Stock Exchange (FTSE) upgraded the Vietnam market was also a decisive factor, affecting the overall market.

According to KBSV, Vietnam’s stock market had the opportunity to be upgraded to the Secondary Emerging Market in September 2020. Investors could expect a significant flow of capital into the Vietnam market.

When upgraded, Vietnam would have the opportunity to access funds with a significant asset scale allocated according to the emerging market index set in FTSE, including the Vanguard FTSE Emerging Market ETF, which was the largest emerging ETF market fund in the world. Therefore, although the proportion of Vietnamese stocks in the Emerging Markets (EM) Index was forecasted to be low, it would still generate a large amount of cash flow into the Vietnam stock market.

KBSV stated that the most positive reflection phase would only focus on the period before being upgraded. The nearest similar case was the case of Romania, which had increased by nearly 38 percent since the beginning of the year, anticipating the Secondary Emerging Market in September 2019. However, investors should note that the stock index would be able to adjust after the upgrade came into effect, as in the case of the United Arab Emirates (UAE) and Qatar, the two markets decreased by five percent and 20 percent per year, respectively after being upgraded. The Vietnam stock market would have many positive changes.

Market liquidity would be significantly improved after upgrading. At that time, Vietnam could absorb better large-scale investments.

Finally, the expectation of equitisation and divestment of state-owned enterprises would be accelerated in 2020, the final year in the equitisation plan, divestment of state-owned enterprises in the period from 2016 to 2020 after the delay. That was also a bright spot expected to have a positive impact on the Vietnamese stock market.


Category: Stocks, Vietnam

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