Foreign investors fueled a wave of selling in Vietnam's stock market throughout March 2024. Net sales of Vietnamese equities by foreign entities exceeded $364 million after factoring in matching transactions.

This selling pressure led to the Vn-Index ultimately closing the month up at just 2.5% at 1,284.09 points, despite significant intra-month volatility.

The heaviest selling was concentrated in blue-chip stocks. Real estate giant Vinhomes Joint Stock Company (VHM) and dairy conglomerate Vinamilk (VNM) endured net sales topping $80 million each. Consumer staples company Masan Group Corporation (MSN) also saw intense foreign selling exceeding $40 million.

Domestic Investors Absorb Discounted Shares

Individual investors stepped in as net buyers, offsetting some of the foreign selling pressure. Total net purchases by Vietnamese individuals surpassed $619 million, with a focus on the food and beverage sector. Real estate, banking, and other sectors heavily sold by foreign funds were also targeted by these buyers.

Domestic institutional investors were more cautious, ultimately showing a slight net selling position of $9 million after matching transactions.

Shift Toward Mid-Caps

The selling pressure from foreign investors seems to have triggered a rotation within the Vietnamese market. Cash flow allocation data points to an increasing favor for mid-cap stocks and a waning appetite for large-cap companies. The VNMID index outperformed both the small-cap focused VNSML and the blue-chip VN30 in March, appreciating by 5.41%.

Vietnam's stock market faces a period of uncertainty. The persistent exit of foreign capital raises questions about near-term stability. However, the sustained buying by domestic individual investors suggests a degree of underlying confidence in the market's long-term prospects.

Continued strong liquidity within the market points to active investor participation, a signal that further volatility is likely ahead.