Strategy: Know the flows — Keep foreign net selling in context

Know the flows — Keep foreign net selling in context (August 14)

Persistent foreign net selling remains a headwind for the market. The problem is not unique to Vietnam, as foreign investors have been major net sellers of most regional markets YTD. However, as we noted in a related report published in April, we do not believe that foreign selling will continue forever. For example, foreign investors clearly played a stabilizing role during the end-July panic selloff that followed the news of the secondary COVID-19 outbreak. In addition, Vietnam is set to become the biggest frontier index market in November. Although global frontier fund AUMs likely remain under pressure, we reckon the country weigthing rebalance should mean about US$600-750m in one-off fund inflows into Vietnam stocks, with open-FOL large caps as the key beneficiaries.