Macro/ Strategy

The sideway market was partly due to the net selling from foreign investors. Therefore, the cessation of foreign selling will bring a positive impact on the market. There are factors that we can put in the watchlist to expect a reversal of foreign flows. The factors include: (1) Vietnam emerging market upgrade, and (2) stable or decreasing global interest rate (Fed and 10Y US Government bond yield). The stable rate will lead to the stable exchange rate. When these factors appear simultaneously, foreign capital flows will return. We have already discussed the market upgrade has also already been discussed in our latest "Investment Outlook 2025 – Unlock Growth".

Global interest rates continue to remain at a level in 2023 and 2024. US government bond yields, instead of decreasing following to Fed’s rate cut, have increased sharply, going back to the old peak in 2023. According to data from the Fed of Saint Louis, the average 30Y mortgage fixed rate has not decreased but remained at a high level in 2023 and 2024. In addition, the EU government bond yields have also remained at same the level in the last 2 years. The current interest rates may influence the equity valuation of the foreign investors when the risk premium will be higher.