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Vietnam stock market attracts foreign investors

Mon, 03 Nov 2014. Last updated Sat, 15 Nov 2014 11:34

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With improved macroeconomic situation in Vietnam, low inflation and interest rates, Vietnam stock market is heading for the 14th year of constant net buying of foreigners. The improvement is accepted by international stock markets and financial community.

During the most recent visit to Vietnam, Mike Smith - General Director of ANZ Group said the Vietnam economy has changed in a positive direction, overcome the most difficult macroeconomic phase with indicators improved. "This is very encouraging thing for foreign investors in Vietnam coming from Japan, Korea, Taiwan (China), Europe, US and Australia to increase investment in Vietnam. This trend will continue", he added. According to the recent reports of international organizations, the stable environment of Vietnam macro economy is highly appreciated. Research group of HSBC said Vietnam will grow positively in 2014 based on exports, foreign investment in the context of controlling inflation at low levels. International Monetary Fund (IMF) in October 2014 stressed that the government has achieved significant results with the restructuring of state-owned enterprises in Vietnam and credit institutions. This move will help the economy to achieve higher growth in the future.

Mr. Barry Weisblatt who works at the foreign institutions like Deutsche Bank, CIMB, Bank of America, as well as the Director of analyst group under Vietnam Prosperity Bank Securities (VPBS) reflects that Vietnam has a good image in the eyes of international investors. In the report presented at the seminar "The world economy and Vietnam, the 2014 situation and 2015 prospects" held on the next November 4th, Mr. Barry emphasized, "The major rating agencies upgrade and positively assess the prospects of economy in Vietnam. Credit markets also reflect positively with lower CDS arbitrage". The improvement of the macroeconomic situation is accepted by the stock market and international financial community. According to Bloomberg data, from the beginning of 2014, VN-Index has risen more than 16%, ranking 10th among 30 indices in Asian - Pacific market. Data from HCMC Stock exchange (HOSE) also shows that from the beginning of 2014, foreign investors have bought net of over 3,500 billion dong (about US $165 million) in the market after 13 consecutive years of buying net here.

 

Representative of Market Vectors Vietnam ETF

 

Don Lam - General Director of Vinacapital Asset Management Company  reveals that a lot of foreign investors are interested in Vietnam stock market, and they are awaiting further investment opportunities, in the context of currency values ​​remained stable, and low inflation proportion. According to Vuong Tuan Duong - Deputy CEO of VOF under Vinacapital, with a P/E forecasted at level 13 in 2015, compared with level 15 in other markets in the region, Vietnam stock is still cheaper than that of Thailand, Indonesia, and Philippines. "Vietnam is still attractive to investors," Mr. Duong said. Having agreements, the analysis group of Dragon Capital Asset Management assesses Vietnam’s stock market will be positive developed in the last quarter and throughout 2015. With a population of over 90 million people and the majority of which is in working age, plus many free trade agreements to be signed, Dragon Capital Asset Management predicts that retail will be a gold mine of Vietnam. "We believe the market will be strengthened by the potential in the retail sector," the expert informed. The second-largest foreign fund in Vietnam stock market estimated that retail investors had poured more US $ 140 million into securities accounts in the third quarter 2014 and approximately US $ 320 million since the begining 2014. This figure is higher than the taht in 2013 (US $230 million).

 

Stock market - Bloomberg

 

Besides, foreign investors are also particularly interested in the equitization process in Vietnam. According to the strategy approved by the Prime Minister, to the end of 2015, Vietnam will stake of 432 businesses. This promises to be the "new items" for the stock market in the future. "Foreign investors are certainly interested in equitization, especiallu after the success of such companies as Vinamilk, Hau Giang Pharmacy," said Andy Ho - CEO of VOF. Ms. Pamela Kustas - expert on the stock market in Southeast Asia under Bloomberg said ETFs would become a new trend in the future and bring special benefits for foreign investors, since regulations do not limit the percentage holding fund certificates and high transparency.

However, foreign investors also recommend that Vietnam needs to further reform to maintain the results in the context of fierce regional competition. "It is necessary to learn from other countries, to see what they are doing, how they are appealing investment, thereby making it more attractive in order to attract capital flows into Vietnam, not to flow to other countries. Attracting investors at the same time means more job created, and boosts economic growth higher", ANZ leader stressed. Dragon Capital's experts also expect the policies of the Securities and Exchange Commission for upgrading stock market in Vietnam since the frontier market to emerging markets in MSCI index, which aims to attract more international investors. Currently, the net purchase of foreign investors in Vietnam remains modest compared to Indonesia ($ 2.4 billion) and the Philippines ($ 1.3 billion) which have been ranked the MSCI's newly emerging list. Related to equitization, according to Andy Ho, this process needs to push faster, provides more information to investors, especially businesses after IPO which should be quickly listed on the stock market, at least in one year to ensure transparency and liquidity for the stock. Production situation of Vietnam enterprises are showing signs of warming reflects the optimistic figures of 2014, impetus for joining the Trans-Pacific Partnership (TPP), the ASEAN Economic Community (AEC) and some other FTAs.

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