Huge investment flows through ETFs
According to Bao Viet Securities (BVSC) and data from Bloomberg, in the first six months of 2019, foreign investors have invested USD 327mn (VND 7,500bn) in Vietnam stock market. Notably, while investors have withdrawn their money from other emerging markets since May, they have continued investing in Vietnam. This shows that Vietnam stock market is still attractive in the eyes of foreign investors.
About VND 5,600bn out of VND 7,500bn investments from foreign investors in Vietnam stock market have been invested through ETFs. Only iShares Frontier Markets 100 ETFs net sold in the first six months as the proportion of Vietnam in the MSCI Frontier Markets 100 Index fell from 17% to 15% after Argentina was removed from this index. The other ETFs, such as VanEck Vectors Vietnam ETF, DB Xtracker FTSE Vietnam ETF and VFMVN30 ETF, net bought in 6M/2019. The investment flows from ETFs are expected to continue playing an important role in Vietnam stock market.
Some tickers which attracted investors the most over the last six months include VinGroup-VIC (net buy of VND 5,775bn), Masan Group-MSN (net buy of VND 2,616bn), Vietcombank-VCB (net buy of VND 1,834bn), Petrolimex-PLX (net buy of VND 1,772bn) and Vincom Retail-VRE (net buy of VND 828bn).
The other tickers which were net sold by foreign investors include Vietjet Air-VJC (net sell of VND 1,961bn), HDBank-HDB (net sell of VND 816bn) and Hau Giang Pharmaceuticals-DHG (net sell of VND 688bn).
Drop in revenue and profit
The P/E and P/B ratios of Vietnam stock market stood at 16.6x and 2.4x at 3 July 2019, respectively. Compared to US, China, Korea, India, Thailand, Philippines and Indonesia markets, P/E and P/B of Vietnam stock market is in line with the average of these countries.
Foreign investment capital expected to lead in stock market
Some research studies show the companies’ performance will continue to play an important role in the stock market. However, it will not be the leading driver of the index as before. The other external factors like US-China trade war and FED policies will influence the stock market much more. The interest rate cut of FED may encourage other central banks to cut their rates and motivate foreign investors to borrow at cheaper cost and invest in some emerging markets like Vietnam.
Currently, there are 10 foreign ETFs in Vietnam, in which Schroder ISF Frontier Markets Equity has invested the biggest amount of USD 101.13mn in Vietnam stock market. According to BVSC, if Kuwait is removed from MSCI Frontier Markets 100 Index and MSCI Frontier Markets Index in the next review in 2020, Vietnam stock market will receive about USD 237.37mn of foreign investment.
Furthermore, Vietnam will have a chance to attract other active and passive foreign investors. Vietnam stock market is expected to raise USD 571-966mn from foreign ETFs if it is upgraded in the next review of FTSE in March 2020. The passive investment flow is also estimated at USD 420-710mn. These investment flows are expected to focus on big cap and leading stocks.