ETF capital inflows helps Vietnam become bright spot of capital attraction

ETF capital inflows from 10 major investment funds into Vietnam’s stock market in April topping 370 million USD. (Photo: Vietnamplus)

Hanoi (VNA) - SSI Research considers Vietnam to be a bright spot to attract capital in Asia thanks to exchange-traded fund (ETF) capital inflows. In April, ETF capital inflows recorded a record value with net capital inflows amounting to 370 million USD, equivalent to about 8,700 billion VND.

In particular, mainly thanks to the newly established Fubon FTSE Vietnam fund (in April), contributing VND 7,800 billion, in addition to many other ETFs maintaining positive cash flow such as VFM VNDiamond (VND 612 billion), VanEck Vectors Vietnam (VND 196 billion), SSIAM FINLead (VND 180 billion), FTSE Vietnam (VND 75 billion).

It is estimated that in the first 4 months of the year, Thai investors have poured an additional VND 2,000 billion into Vietnamese stocks through DR VFMVN30 ETF. This is the 6th consecutive month Thai investors net bought VFMVN30 ETF, after a period of strong net withdrawal in 2020 by Covid-19 translation.

On the contrary, the VFM VN30 ETF continued to be net withdrawn with 111 billion dong, however the withdrawal value was not significant and dropped sharply compared to the previous two months, so this is also a more positive signal.

Since the beginning of the year, ETFs have net withdrawn a total of 13,200 billion dong from the Vietnamese stock market. Active funds still withdraw their capital for the 8th consecutive month, but the net withdrawal in April is 41 million USD, down 54% from the previous month and very small compared to the amount of ETF capital. Therefore, the Vietnamese market still recorded a record-breaking month of capital (higher than the capital entering the Chinese market).

On the stock exchange, foreign investors net bought 273 billion dong after 6 consecutive months of net selling. Although this result was contributed by the VHM put-through transaction on April 9, foreign investors also turned to net buyers in the last trading days of April, showing a quite positive signal.

With total assets of 8,200 billion VND and becoming the 5th largest ETF in Vietnam, the Fubon Fund has reached its target asset value prior to the IPO. Cash flow into the fund may slow down after the IPO, but SSI Research still expects good cash flow trend will be maintained not only in Fubon fund and other ETFs. Therefore, foreign capital inflows into Vietnamese stocks in May may not be as strong as in April but will remain positive.

According to Nguyen Thi Thanh Tu, senior analyst, SSI Securities, many other ETF funds also maintain positive cash flow, such as VFM VNDiamond, VanEck, SSIAM FINLead and FTSE Vietnam, among others.

However, the VFM VN30 ETF fund continued to have a net withdrawal of 111 billion VND. Tu believes that the net selling value of VFM VN30 ETF is insignificant, this is also a positive signal.

Besides, active investment funds remained net sellers for the 8th consecutive month, but the net withdrawal in April was 41 million USD, down 54% compared to March. 

On the stock exchange, foreign investors returned to a net buying of 273 billion VND in April (after 6 consecutive months of previous net selling).

Forecasting the trend, Tu believes that foreign capital inflows into Vietnamese stocks in May maybe not as strong as April, but will still maintain a positive trend.

According to Tu, the pressure to raise interest rates is the biggest risk affecting global investment flows.

Tu pointed to a survey by Bank of America Merrill Lynch showing that 93% of fund managers think that global inflation will increase in 2022 and this is the highest level since 2004. Accordingly, inflation may force central banks to end their easing programs earlier than scheduled./.