Investors dumping Vietnam stocks for Tesla, crypto | Property

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Over­seas investors are offload­ing shares despite VN Index’s 33 per­cent gain mak­ing it top per­former in South­east Asia

By Bloomberg

For­eign investors have been dump­ing Viet­nam stocks all year, despite a surge to record highs. Com­pe­ti­tion from pop­u­lar retail stocks like Tes­la Inc. and cryp­tocur­ren­cies looks like part of the rea­son why.

Kore­an retail investors — who made up 16% of net for­eign inflows between 2017 and 2019 — are among those sell­ing out, offload­ing a net $166 mil­lion worth of shares so far this year, accord­ing to data from the Korea Secu­ri­ties Depos­i­to­ry. Their appetite for risk has shift­ed from emerg­ing mar­kets to the U.S., thanks to the strong returns in spec­u­la­tive assets there, ana­lysts say.

“Bit­coin and U.S. stocks, espe­cial­ly tech growth stocks, showed big swings,” said Lee Soyeon, a mar­ket strate­gist at Korea Invest­ment & Secu­ri­ties Co. “So investors were attract­ed to them, rather than Viet­nam. Stock trans­ac­tions are a lit­tle com­pli­cat­ed and returns have lagged.”

Over­seas investors have post­ed out­flows in all but one month this year, despite the bench­mark VN Index’s 33% gain mak­ing it the top per­former in South­east Asia. In total, they have sold a record $2.7 bil­lion worth of shares in 2021, accord­ing to data com­piled by Bloomberg.

“A lot of the for­eign sell­ing is sim­ply prof­it tak­ing,” said Stephen McK­eev­er, head of the insti­tu­tion­al client divi­sion at Ho Chi Minh City Secu­ri­ties Corp. “The mar­ket has per­formed strong­ly and some investors have cashed out,” with Kore­an retail investors switch­ing their atten­tion to U.S. tech stocks such as Tes­la, he added.

Still, Viet­nam watch­ers includ­ing BNP Paribas Asset Management’s Jes­si­ca Tea and SSI Secu­ri­ties Corp.’s Quynh Cao see pos­i­tive long-term fun­da­men­tals in the country’s stock mar­ket and sus­pect for­eign investors will come back. Demo­graph­ics, Vietnam’s place in the Asian pro­duc­tion chain and attrac­tive val­u­a­tions offer upside to equi­ty investors, they said.

“We think the net for­eign sell­ing we have seen over the last two years is not nec­es­sar­i­ly reflec­tive of for­eign investor sen­ti­ment toward Viet­nam which remains very pos­i­tive,” said Ho Chi Minh City Secu­ri­ties’ McK­eev­er. “We call this the sen­ti­ment paradox.”



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