HANOI: Investment funds are currently focusing on capitalising on opportunities in sectors that exhibit robust resilience or the ability to go against the cycle.
All signs currently indicate a continued withdrawal of funds from South-East Asia exchange-traded funds (ETFs).
SSI Research experts are maintaining a cautious stance on the flow of capital into Vietnamese ETFs, however, the outflow intensity is expected to be more limited compared with the previous quarter.
“Positive indicators may start to appear as the macro environment (including exchange rates and interest rates) or political stability improves. In particular, Vietnam could benefit as profit-taking trends and opportunities for alternative investments emerge in the Taiwan market,” SSI Research said in a statement.
In July, ETFs saw ongoing capital outflows totalling 2.33 trillion dong or about US$93.4mil , accounting for 3.5% of total assets.
Since the beginning of the year, ETFs have experienced cumulative net outflows of 18.5 trillion dong, equivalent to 24.4% of total assets by the end of 2023, reducing total ETF assets to 59.9 trillion dong.
Overall, following a choppy July (especially towards the month’s end), capital inflows into equity funds are likely to be more cautious in August, evaluating the risk of a market downturn in the United States.
SSI Research remains cautious following the dissolution of the iShares Frontier Fund in Vietnam by Blackrock at the beginning of June.
With a total value of US$425mil, the iShares Frontier Fund had the highest allocation to Vietnamese stocks at 28%.
According to data from BSC Research, after the announcement, between June 7 and June 18, the fund sharply decreased its exposure to Vietnamese stocks from 28% to 13.77%, representing about US$50.22mil remaining.
Foreign investment funds and investors play a crucial role in the Vietnamese stock market’s institutional investor landscape. However, the group has been consistently reducing their positions since 2023.
Specifically, foreign investors have net sold US$2bil since the beginning of 2024. Taking into account data from 2023, their net sales amount to around US$4bil.
Nguyen Quang Thuan, chairman of FiinGroup, said that foreign investors are selling off assets and exiting emerging markets due to doubts about a potential interest rate cut by the US Federal Reserve.
Chairman of Dragon Capital, Dominic Scriven, said that part of the reason for this trend is Vietnam’s lack of market status upgrade and new compelling factors.
Amid government divestments in various firms, significant opportunities exist to attract more institutional investors domestically and internationally. Investment funds are adaptable across all scenarios, he said. — Viet Nam News/ANN
