In February, local investors opened 57,086 new securities accounts, the third highest number of all time after last December and January 2021, according to the Vietnam Securities Depository (VSD).

Investors at a securities company. Photo: Tran Quynh

This resulted in 3,805 new accounts per day, excluding weekends and holidays. Compared to the previous month, the number of new accounts witnessed a sharp decline of over 30,000. But the February figure is still significant as this was the shortest month in a year, not to mention that the week-long Tet holiday fell on February.

VSD’s report revealed out of 57,086 new securities accounts, up to 57,018 were from individual investors, and 68 from organizations.

In contrast, the number of new accounts from foreign investors decreased by 39% month-on-month to 292 in February.

A strong capital inflow from local investors helped the stock market offset the selling pressure from their foreign peers in February with a net sell value of over VND1.4 trillion (US$60.4 million) on the Ho Chi Minh City Stock Exchange (HOSE).

New investors, or F0, was also a major factor pushing the benchmark Vn-Index to recovery from 1,056 in late January to around 1,200 by the end of February.

The market liquidity was also maintained at a high level with the average trading volume per session of nearly VND20 trillion (US$863.44 million).

The overload issue has been the main reason forcing the stock exchange to halt market trading in recent months, as HOSE’s transaction processing capacity fail to keep up with a surge in orders.

A number of factors has led to local investors turning to the stock market, including (1) the current low-interest rate environment as a result of the central bank cutting the policy rates to aid economic recovery; (2)  the government’s Decree No. 81/2020/ND-CP issued last September, which stipulates the standards for corporate bond issuance in the market; (3) Vietnam’s effective containment of the Covid-19 pandemic and remained a spotlight of the world economy in 2020; (4) the attractive valuation of Vietnamese stock prices compared to regional and international countries; (5) the prospect of upgrading Vietnam’s stock market from frontier market to emerging status in the next two years.