The Vietnamese stock market witnessed a big wave of net withdrawals by foreign investors at a total value of US$2 billion in the first half of 2024.

Net selling among foreigners was a topic of discussion at the ‘July Dialogue’ program about stock market upgrade and capital mobilization held in Hanoi on Friday last week.

Nguyen Quang Thuan, chairman of FiinGroup, pinpointed some reasons behind the steep net selling on the local stock market.

Foreign investors were working to rearrange their assets and withdraw from some markets because the Federal Reserve kept interest rates at high levels, Thuan stated.

In addition, foreigners stepped up action to realize profits due to concerns over risks of the Vietnamese dong - dollar exchange rate.

He stated that concerns over the quality of bank assets and the less optimistic outlook of the real estate market have worried foreign investors, resulting in a sharp net withdrawal.

Thuan underlined that it is vital to upgrade the stock market to welcome new capital flows and investors, but ways to retain these investors should be taken into account.

Dominic Scriven, chairman of Dragon Capital, said that foreign investors net sold $4 billion on the Vietnamese stock market over the past four years. In the first half of 2024 alone, the total net sales reached an eye-popping $2 billion.

Apart from some objective factors such as the United States’ hike in interest rates, the Vietnamese stock market boasts no new magnets for foreign investors.

The representative of Dragon Capital attributed foreigners’ decision on net selling to the fact that Vietnam has yet to have its stock market upgraded.

Discussing the dong - dollar exchange rate, Nguyen Linh Phuong, deputy head of the Monetary Policy Department under the State Bank of Vietnam, affirmed that 2024 is a challenging year as the Fed continued with a high interest rate.

After several delays, many sources said that the Fed might lower interest rates in September.

Meanwhile, Vietnam’s central bank has constantly cut interest rates to back the economy, leading to a big gap between the value of the dong and dollar.

Phuong said that the central bank is implementing multiple measures to stabilize the monetary market and maintain a reasonable forex rate.

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