58. Foreign Trading Data

Published at 1683737943.977692

Foreign Investors

Foreign group is someone who registers an account and trades on the Vietnamese stock market. Foreign investors can be individuals, organizations, or foreign investment funds, such as Vinacapital VietNam(VOF), VietNam Holding Limited, and VietNam Equity Fund.

The stock exchange in Vietnam publishes and shares information about foreign investors to all other investors.

Here are key reasons why investors should pay attention to foreign trading data on stocks, especially in the VN30-Index.

  • Stable cash flow. Foreign investors include ETFs or investment funds from China, Taiwan, Korea, Europe, and America. They usually have large and slow-moving cash flows, which tend to last for a brief period of time. Knowing the net buying or selling trends of foreign investors can help traders limit their risk and increase the expected profit.

  • Large cash flow. The amount of money that ETFs and funds invest in Vietnam is still small. However, it’s still significant compared to the size of the Vietnamese market.

  • Professional cash flow. The Vietnamese market has many technical barriers and is not fully open to the majority of foreign investors. Only a very few professional investors or investment funds can access it. Therefore, their trading behaviors reflect the expectations from a special group of professionals.

  • Long-term cash flow. Foreign investors usually buy and hold stocks rather than trading them in a short-term of within a few day. Foreign transactions typically move the market’s valuation into new equilibrium. Even though they have a small share in terms of trading volume, if we consider the long-term investment and ignore short-term transactions, the trading value of foreign investors has a significant impact on the Vietnamese stock market.

  • VN30 is the underlying asset of the futures contact. The basis (the gap between VN30F and VN30) varies over time, but it needs to converge to 0 on expiration days. Foreign trading data on large-cap stocks of VN30 will thus directly influence the derivatives market.

  • Simulated cash flow. Some local investors collect foreign trading data to make investment decisions. They mostly hold similar positions to foreign investors. That means when they see a sudden large net trading volume from foreign investors, they will likely follow suit and amplify the impact of foreign investors.

Intel Center provides 2 specialized charts (Figure 25 and Figure 26) related to foreign trading data, focusing on stocks in the VN30-Index and VN30F futures contracts.

Position Accumulation of VN30F From Foreign Investors

Figure 25 below shows the cumulative chart of foreign investors in VN30F and the daily number of contracts they buy and sell.


For example, as of Sep 9, 2022, foreign investors have a total of 14.512 long positions, including 8,465 VN30F1M contracts, 5,494 VN30F2M contracts, 447 VN30F1Q contracts, and 106 VN30F2Q contracts.

This index can help predict the future investment directions of foreign investors because they can buy derivatives contracts first and buy stocks later to limit price slippage. In the example above, foreign investors hold 14,512 long positions of VN30F at 950 points, equivalent to a future contract at 95 million VND. Assume that 70% of these contracts are to hedge the opening price of the underlying securities position. We can estimate foreign investors will be net buyers in the Vietnamese stock market:

70% x 14.512 x 95.000.000 =  965 billion VND

This estimate gives investors more information to invest in the market.

Trading Value of VN30 Stocks From Foreign Investors

Statistics on foreign transactions is based on the net transaction value in the whole Vietnamese market. However, for traders in the derivatives market, the trading value specifically on VN30 stocks is more meaningful than on VN-Index.

ALGOTRADE created the chart “trading value of VN30 stocks from foreign investors” (Figure 26) to provide real-time foreign transaction data on VN30.

This chart can provide future predictive value since foreign investors are usually stable in the long run. For example, when foreign investors switch from net selling to strong net buying as in the period from November 1, 2022, to November 18, 2022, local investors can expect the trend to continue for many months if market prices stay stable.

Top Stock Changes in Foreign Ownership

Rank 5 stocks that are bought and sold the most by foreign investors compared to the foreign ownership room for each. The formula for calculating the change rate is:

(Buy amount – Sell amount)/(Foreign ownership room х Total number of shares)

The result is a relative value that shows how foreign investors decide for each stock or company. Traders can use these data to determine the net trading trend of foreign investors.

Top stocks with foreign ownership change will be most valuable when looking at a week (5 trading days) or a month (20 days). When looking at a longer term, or much shorter term (like within a day), it’s only a reference and does not offer as much information value.