Foreign capital returns strongly to Vietnam
There are signs of foreign capital returning to Vietnam in the context of global stabilization. Vietnam has a great opportunity to break out thanks to the rapid recovery from Covid-19 and its open economy.
Finnish Pyn Elite Fund (Mutual Fund Elite) has recently sharply increased its ownership ratios of certain shares, including Vinhomes shares (VHM) of the dollar billionaire Pham Nhat Vuong, and POW.
The stock market has seen foreign investors coming back to buy more than sell in many consecutive trading sessions.
Analysts say this will help push up the Vietnamese stock market with the VN Index hitting the 1,000 point threshold after days of net sales by foreigners.
The sharp market decline because of Covid-19 has been followed by an impressive recovery. The stock market has regained positive growth compared with the beginning of the year.
Pyn Elite Fund believes the Vietnamese stock market will be much more positive in 2021 with listed companies’ profits expected to increase by 34 percent.
Even in the difficult period, Pyn Elite Fund’s portfolio performance, according to the latest report, still increased by 12.5 percent compared with the beginning of the year, far exceeding the VN Index gain, thanks to the strong rise of a number of shares in its portfolio, such as VietinBank (+ 59 percent).
According to Pyn Elite Fund, the VN Index valuation is now quite attractive compared with S&P 500, which is an important factor attracting investors.
Foreign investors’ net sales have reached $540 million so far this year, but with the recent happenings, Pyn believes that foreign capital flow will come back to Vietnam.
Bloomberg reported that Vietnam is among the markets attracting the most foreign capital since 2013. The cash flow has come back to the market in the context of a brighter Covid-19 vaccine outlook, less tension in US politics, and the signing of the RCEP.
According to Pyn Elite Fund, the situation of Asian economies is brighter than in the US and Europe.
In April, Pyn Elite Fund gave a relatively accurate forecast that the VN Index would see high growth in the last months of the year after bottoming out at the 666 point area.
The fund predicted a 3 percent GDP growth rate for Vietnam this year, and 7 percent in 2021.
Vietnamese analysts believe that the country will gradually attract capital flow back in the last months of 2020 and early next year thanks to the control of the pandemic, the establishment of new ETFs, and the news about the increase in proportion of shares in the Frontier Markets basket.
China Trust Vietnam Fund, with consulting from Dragon Capital, is expected to spend about $100 million on Vietnam’s equities through VFMVN Diamond ETF certificates.
Margin rates offered by securities companies have been steadily lower since the beginning of the year. They have even declined faster than the rates of bank loans, a trend reinforced by foreign securities players.
Many large corporations, valued at billions of dollars, do not intend to list their shares on the bourse.