Foreign Investors Sell VN Stocks for 5th Day Ahead of FTSE Review

Overview

Foreign investors remained cautious ahead of FTSE Russell’s semi-annual review, with net selling extending to five consecutive sessions on the Ho Chi Minh Stock Exchange (HOSE). The VN-Index fell below 1,730 points as foreign outflows pressured the market, with large-caps such as HPG, VNM, and major banks declining. The review, due August 21, could potentially upgrade Vietnam to secondary emerging market status, which may attract forced buying from index funds.

Key Facts

• Foreign investors net sold VND 1,400 billion in August and VND 76,000 billion year-to-date.
• Net selling extended to five consecutive sessions, with foreign buying at VND 1,100 billion and selling at VND 1,800 billion on the latest session.
• VN-Index fell 5 points to below 1,730 points, with over 210 decliners vs. about 105 advancers on HOSE.
• FTSE Russell will announce its semi-annual review results on August 21, effective one month later.
• Domestic securities firms estimate 27-30 Vietnamese stocks may qualify for the FTSE index basket.
• Market liquidity remained low at under VND 15,000 billion, with VIC contributing over VND 1,000 billion.
• Valuation metrics: P/E at 10.35x and P/B at 1.61x, excluding Vingroup stocks.

What Happened

Foreign investors reduced buying to the lowest level in 1.5 months, focusing on blue chips like HPG, VNM, PNJ, VIX, and TCB, while selling over VND 1,800 billion, extending the net selling streak to five sessions. According to VPBank Securities, foreign outflows totaled VND 76,000 billion since the start of the year, mirroring regional trends due to inflation pressures from Middle East tensions and elevated US Treasury yields.

The cautious sentiment spread to domestic investors, dragging the VN-Index down more than 5 points to below 1,730. Banking stocks like VCB, CTG, BID, and STB fell over 0.5%, while LPB, TPB, and ACB gained about 1%. Securities stocks including SSI, VND, HCM, and VCI declined, and most real estate stocks fell over 1%, with CII as the only gainer.

Market Context

HPG closed at VND 21,200 on August 19, reflecting the broader market weakness. The VN-Index’s decline below 1,730 points comes amid persistent foreign selling, which has pressured large-caps across sectors. The market’s low liquidity, under VND 15,000 billion, indicates cautious participation. Analysts predict the index could retreat to 1,700 points, where valuations appear reasonable at P/E of 10.35x and P/B of 1.61x, excluding Vingroup.

Strategic Significance

The FTSE Russell semi-annual review is a pivotal event for Vietnam’s equity market. A potential upgrade to secondary emerging market status would likely trigger mandatory buying from global index funds, potentially reversing the current foreign outflow trend. This could benefit large-cap stocks with high liquidity and strong fundamentals, such as HPG, VNM, and major banks. The upgrade would also enhance Vietnam’s attractiveness to international investors, supporting long-term market development.

What to Watch

• FTSE Russell’s official announcement on August 21 and the list of qualifying stocks.
• Foreign net flow data in the following weeks to see if selling pressure subsides.
• VN-Index movement toward the 1,700-point support level and any rebound.
• Q2 earnings reports from affected tickers like HPG, VNM, and banks for fundamental confirmation.
• Changes in US Treasury yields and Middle East tensions that could influence global capital flows.