Foreign trading activities are forecast to increase this year thanks to many supporting factors, especially exchange-traded funds (ETFs), according to Việt Dragon Securities Company (VDSC).

In the past two years, the E1VFVN30 ETF and VNM US ETF were the two main capital-attracting ETFs of the Việt Nam stock market.

It is likely that E1VFVN30 will continue to attract cash flow from its two key investors, Thailand and South Korea, because the interest rates in these two countries are at low levels after the two local central banks made rate cuts last year, VDSC said.

Việt Nam’s benchmark VN-Index increased by 7.8 per cent in 2019, higher than South Korea's KOSPI, which only increased by 6.3 per cent, and Thailand’s SET which rose by only 0.6 per cent.

Foreign investors have been net buyers over the past two years, with most of the net buying activities taking place through put-through transactions.

The net selling of foreign investors has slowed down as the value dropped sharply from over VNĐ16 trillion (US$692.5 million) in 2018 to more than VNĐ1 trillion in 2019. Foreign investors had even net bought VNĐ3 trillion in the first four months of 2019 but then they became net sellers due to the trade tensions between the US and China.

It is expected that Kuwait will be upgraded from frontier market status to emerging market by the Morgan Stanley Capital International (MSCI) in May 2020.

Accordingly, the occupancy of Vietnamese shares in the MSCI Frontier 100 Index would increase to 30 per cent, instead of only about 12.3 per cent as currently. If so, the passive fund Ishares MSCI Frontier 100 ETF could buy in $86.5 million worth of Vietnamese shares, VDSC said.

The Hồ Chí Minh Stock Exchange (HOSE) introduce new indices that contain foreign-ownership-capped shares in November last year, including VNDiamond, VNFin Select and VNFin Lead. According to Saigon Securities Company, many large fund management organisations such as SSIAM, VFM and VinaCapital all plan to launch ETFs based on new indexes implemented by HOSE.

The stock market is forecast to boom in the near future as foreigners are now able to invest more in their preferred stocks, thus luring foreign capital inflows into the Vietnamese market.

SSI Fund Management Company (SSIAM) is completing procedures to launch SSIAM VNFin Lead ETF, simulating the movement of financial stocks.

VietFund Management (VFM) is also preparing for the launch of its two new ETFs based on the VNDiamond index.

Market experts also forecast that foreign capital inflows could improve in 2020 thanks to a number of external factors, such as the cooling of US-China trade tensions and the divestment and equitisation process of State-owned enterprises in 2020.

Vietnam News - January 6, 2020


Global news, pre-Tết sentiment key to VN stocks

US-Iran tensions and pre-Tết sentiment will be two key factors impacting the Vietnamese stock market in the coming week.

The local stock market is forecast to move marginally between 950 points and 970 points.

The benchmark VN-Index on the Hồ Chí Minh Stock Exchange inched down 0.16 per cent on Friday to finish last week at 965.14 points.

After one trading week, the VN-Index gained a total of 0.17 per cent. The Vietnamese stock market closed on Wednesday for the New Year holiday.

The benchmark index moved within a narrow range last week under pressure from international stock markets, which were weighed down by tensions between the US and Iran following an airstrike that killed a top Iranian military official on Thursday.

The event escalated tensions in the relationship between the two nations and lifted crude prices on international markets.

Brent crude jumped 3.5 per cent on Friday to end last week at US$68.60 a barrel while the US crude West Texas Intermediate (WTI) soared 3.0 per cent to finish at $63.05 a barrel.

But the strong growth of oil prices did not accompany gains for all local petroleum and gas stocks.

PetroVietnam Gas shares (GAS) saw a two-day rise of 1.2 per cent on Thursday and Friday but fell a total 2.3 per cent during the week.

PetroVietnam Drilling and Well Services shares (PVD) gained a total of 1.3 per cent last week and shares of PetroVietnam Technical Services (PVS) jumped 3.4 per cent.

US-Iran tensions would benefit oil and gas stocks in the short term, BIDV Securities Corp (BSC) said in its weekly report.

But in general, market sentiment was poor last week, especially after the news regarding the US air strike.

Investors were not confident at the moment, as international stocks were under pressure from US-Iran diplomatic relations, Sai Gon-Hà Nội Securities Corp (SHS) said in a note.

“Investors are becoming more pessimistic about the market’s short-term prospects,” SHS said.

The VN-Index may keep struggling as it has been in the last four weeks and the settlement of the index may last longer than expected, the company said.

US-Iran tensions could impede the market sentiment in the coming week, Nguyễn Trung Du, VNDirect Securities Corporation’s investment director, told tinnhanhchungkhoan.vn.

A majority of investors were cautious after the US air strike killed the Iranian official but some thought the event would not have big impact on global stocks, analyst Hoàng Thạch Lân at Việt Dragon Securities Corporation said.

“Now we have to wait for further responses from Iran and other leaders around the world, and look at what effect the event has on global stocks.”

“Monday is important as it would shape the market movements for the whole week,” he said.

Another factor that may be taken into consideration is the pre-Tết sentiment, as there are only three weeks to go until the Lunar New Year.

According to FPT Securities Corporation (FPTS), in 2011-19 the VN-Index made gains 13 times in the five-day period prior to Tết holiday and it is expected again in late January.

In 2019, the VN-Index fell a total of 0.38 per cent in the five-day period prior to Tết. In 2018, the benchmark soared a total of 4.76 per cent in the same period and 2.05 per cent in 2017.

But any gains would be marginal as investors would want to save their cash before the holiday, thus lowering the market trading liquidity – which is an essential factor for developing markets like Việt Nam.

The VN-Index may swing in the 950-970 point zone with low liquidity, SHS forecast.

Vietnam News - January 6, 2020