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Securities trading codes to foreign investors on the rise

Released at: 10:35, 09/12/2016

Securities trading codes to foreign investors on the rise

Photo: Duc Anh

The increase in foreign investors indicates stronger confidence in Vietnam's stock market.

by Hung Nguyen

The number of trading codes registered by foreign investors in Vietnam's stock market continues to rise, according to the latest official figures from the Vietnam Securities Depository (VSD).

There were 214 new trading codes issued to foreigners in November alone of which 43 were to institutions and 171 to individuals, according to the VSD. So far to date, the total number of trading codes given to foreign investors is 20,107 (3,244 institutions and 16,863 individuals).

In November alone, the VSD also agreed to alter information regarding 37 foreign investors -14 individuals and 23 institutions - and cancelled the securities trading codes of one institution and one individual.

New trading codes issued to foreigners from March-November

 Source: VSD, December, 2016

The number foreign trading codes issued indicates that foreign investors are interested in the Vietnamese market and are hopeful that the country will foster State-owned enterprises' (SOEs) equitization, according to analysts. The total portfolio value of foreign investors in the Vietnamese stock markets is about $17.3 billion, an increase of $2.6 billion from the beginning of the year, according to the Ministry of Finance (MoF).

The latest figures from the National Financial Supervisory Commission (NFSC) showed that at the end of November 2016, the total value of foreign portfolios reached $19.55 billion, an increase of 20 per cent since the end of 2015, of which foreign investors held 20.3 per cent of the listed stock capitalization and 5.5 per cent of the bond capitalization.

Most foreign portfolios are on the HSX with some $14.6 billion, HNX with some $1 billion and $500 million in UPCoM. VNM is the highest value stock that foreign investors hold with about 49 per cent of the company shares held by foreign investors at a value at $4.1 billion. That value is expected to increase to VND19.5 trillion ($858.4 million next week when 9 per cent of the company shares go on sale with a starting price of VND144,000 ($6.34) per share.

Key foreign investors in the Vietnamese stock markets include Dragon Capital with a portfolio value of $977 million, VinaCapital with $400 million, PYN Elite Fund with $347 million, and FTSE Vietnam ETF with $327 million, according to initial estimations by securities firms and CafeF - an online news portal on stock market.

Other strategic shareholders of large caps are F&N Dairy Investment $946 million with 11 per cent ownership of VNM, Mizuho Bank $840 million with 15 per cent ownership of Vietcombank and Bank of Tokyo-Mitsubishi UFJ $523 million with 19.4 per cent ownership of Vietinbank.

The top 10 largest foreign investors on the Vietnamese stock markets are holding $5.2 billion in portfolio value. Foreign investors net sold on the Vietnamese markets some $340 billion stocks and bonds, an increase of 21.7 per cent since October, 2016, according to VSD's figures.

After a long period of net buying at the beginning of the year most foreign sales have been bonds. “This is a notable signal in the context of the US dollar/Vietnamese dong exchange rate, which has increased by 1 per cent,” NFSC's quarterly report said. “Vietnam's CPI in October increased 4 per cent from the end of 2015, and the US Fed might increase interest rates in December.” 

The number of investors are increasing. However, due to the exchange rate between VND/USD and the newly elected US president, capital flow from foreigners in the Vietnam market was affected. “Two EFT funds were divested quickly in the last three weeks of November - VNM ETF by $26 million and DB ETF by €24 million ($25.83 million). This was due to the exchange rate of VND/ USD increasing, which affected the strategies of foreign investors moving capital from the frontier market back to the US", according to a report from Saigon Securities Incorporation (SSI) released on December 8.

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