BizLIVE -

The country’s benchmark VN Index soared 17% in the three months ended April 30, beating every major market in the region and almost doubling gains from the S&P 500 Index.

Individual Investors Pile into Vietnam Stocks at Unprecedented Pace
According to Bloomberg, individual investors are piling into Vietnam stocks at an unprecedented pace, fueling Asia’s biggest rally and stoking speculation that foreign funds will return after fleeing the market over the past year.
The country’s benchmark VN Index soared 17% in the three months ended April 30, beating every major market in the region and almost doubling gains from the S&P 500 Index.
While foreign investors pulled about $842 million from the Southeast Asian country’s shares so far this year, the tide could be turning. Vietnam equity funds received record inflows in the third week of April even as emerging-market equity funds saw the biggest outflows since January, according to EPFR. A key contributor was a new Taiwan-based Vietnam ETF that’s raised more than $350 million.
A sustained return by overseas investors could drive further gains in a market that -- like in many others around the world -- has attracted retail punters in droves. Plunging interest rates spurred ordinary Vietnamese to open nearly 400,000 new trading accounts in 2020, a record high. In the first three months of this year alone, they opened almost 258,000 more, helping send daily turnover on the Ho Chi Minh City Stock exchange to an all-time high.
The final catalyst for Vietnam could be if international investors reverse their net sales of the nation’s stocks. Vietnam’s retail investors normally model much of their investment behavior around foreign investors when they look for which sectors to favor, according to SSI Securities JSC, the country’s second-largest brokerage.
Vietnam is an “investable market,” according to HSBC Holdings Plc. The flood of local cash has seen trading volumes more than quadruple since the end of 2019, based on 50-day moving averages. The benchmark index now includes 11 stocks exceeding $5 billion in market value, up from just two in 2015. Vingroup JSC has been leading the charge, and the conglomerate is now launching an ambitious plan to sell electric vehicles to the U.S. Vingroup was founded by the country’s richest man, Pham Nhat Vuong, who first got rich selling packaged noodles in Ukraine. The company started out focusing on property development but it now also makes cars and smartphones.
The stock exchange’s other heavy hitters include a smattering of state-backed behemoths -- Bank for Foreign Trade of Vietnam, PetroVietnam Gas JSC -- as well as steelmaker Hoa Phat Group JSC and Vietnam Dairy Products JSC.
Vietnam’s stocks have been climbing amid optimism its export-oriented economy can maintain momentum after being one of the few in Asia to expand last year. Manufacturing activity jumped in April to the strongest since November 2018, according to a PMI report Tuesday. Equities retreated today, sending the VN Index down 1.1% as of 9:38 a.m. local time, after Vietnam’s capital city instructed school pupils to stay home in order to help contain an increase in local Covid-19 cases.
The country is well positioned as the U.S. and Chinese economies lead a global rebound from the pandemic. That’s because Vietnam benefited when U.S.-China trade tensions spurred companies to diversify supply chains out of its larger Asian neighbor.

NHAT TRUNG