In the dynamic realm of financial landscapes, an intriguing interplay unfolds as gold ascends and US stock prices reach unprecedented summits, while Vietnam’s stock index descends, grappling with selling pressures despite optimistic prospects.
In a compelling twist of events, the Vietnamese stock market, though harboring promising potential, finds itself navigating tumultuous waters. As the golden glow intensifies and the US stock market experiences a meteoric rise, the VN-Index, once perched at a lofty 1,100 points 16 years ago, now tumbles down the precipice.
In the realm of US stocks, a riveting narrative unfolds on December 19 (Hanoi time), marked by a symphony of shifts in the US Federal Reserve’s monetary policy. The Dow Jones Industrial Average embarks on a nine-session ascent, while the S&P 500 tantalizingly flirts with a fresh record. The Nasdaq Composite, ever dynamic, surges by 0.67 percent, breaching the 15,000-point milestone for the first time since January 2022.
During the pivotal meeting on December 12-13, the US Federal Reserve signals a triple-cut in interest rates slated for 2024, culminating in the cessation of a prolonged period of monetary policy tightening since March 2022. The Federal Reserve’s dance with interest rates, a complex choreography, has seen 11 increases, propelling the operating interest rate from the historic low of 0-0.25 percent to an unprecedented 5.25-5.5 percent, reaching a 220-year pinnacle.
Bank of America, ever the oracle, prophesies potential interest rate downturns in 2024, with central banks globally infusing capital to revitalize lackluster economies in 2023.
In a theoretical ballet, the Federal Reserve’s strategic stance, echoed by European counterparts, heralds auspicious tidings for the global economy, Vietnam included. The depreciation of the greenback becomes the maestro, orchestrating a crescendo in the world’s gold prices. In Vietnam, the SJC gold price scales dizzying heights, reaching VND75.3 million per tael on December 20.
The anticipated resurgence of major global economies becomes the beacon for Vietnam’s export ambitions, emerging from a sluggish year. The anticipated stabilization of the dong/dollar exchange rate, propelled by the US dollar’s wane, promises to channel funds back into emerging markets, including Vietnam. FDI remains a steadfast ally in 2023, with expectations of FII making a resilient comeback in the forthcoming year.
Yet, amidst the ebb and flow of financial tides, foreign capital continues its exodus from the Vietnamese stock market, exerting unwavering pressure on stocks.
The enigmatic VN-Index, in a recurring saga, dips below 1,100 points for the seventh time in 2023. Foreign investors, custodians of substantial net sales, witness a staggering $1 billion exodus in 2023, with VND450 billion evaporating on December 19.
A forensic report unveils a staggering VND20 trillion in foreign investors’ net sales this year, surpassing the VND15.74 trillion of 2020. Blue-chip titans like MWG (The Gioi Di Dong) and VHM (Vinhomes) bear witness to this financial exodus.
The anomaly of net sales perplexes analysts, juxtaposed against the backdrop of a stable dong/dollar exchange rate for the past two months and Vietnam’s resilient economy boasting elevated growth rates while inflation remains curbed. The horizon appears optimistic, promising increased exports and FDI.
Vietnam, a magnetic attraction for investors from the US, Japan, South Korea, and China, flaunts its economic openness and participation in numerous FTAs. The elevation of the Vietnam-US and Vietnam-Japan relationship to a comprehensive strategic partnership, coupled with burgeoning collaboration with China, is anticipated to draw international investors to Vietnam.
Yet, a paradox unfolds as foreign capital not only bids adieu to Vietnam but also other Southeast Asian nations, finding solace in the embrace of India and Taiwan (China).
Analysts, the storytellers of financial narratives, decipher the net sales as a strategic maneuver by foreign investors, capitalizing on profit-taking opportunities following the sharp ascent of Vietnam’s stock prices in the initial three quarters of 2023. A shadow looms, casting doubt on regional economies in 2024, fraught with perilous high-interest rates and looming debt pressures, while demand stagnates.
Vietnam, occupying the frontier market frontier, becomes an intricate puzzle for investment funds, grappling with dispersal challenges. The marketplace, adorned with goods of varied allure, may not seamlessly align with the discerning tastes of foreign investors.
Yet, amid the enigmatic undertones, glimmers of hope emerge. Fubon, an ETF luminary, indulges in a shopping spree, focusing on securities, banks, and real estate shares, injecting optimism into the narrative.