Stock exchange to enjoy growth in 2012: Minister
Foreign investors currently own as much as US$6 billion in Vietnam’s stock market (77 percent in 20 largest stocks by market capitalization). According to the Vietnam Security Depository (VSD), the number of new investors granted with transaction codes in January increased by 0.13 percent.
The foreign sector tends to move from small retail transactions to bigger ones and increase their investment in large profit-making businesses with a reputation for transparent management, says VSD.
Many foreign investment funds in Vietnam will hold shareholders’ meetings in 2012 and 2013 to decide if they will continue to invest in Vietnam or withdraw their capital from the market.
Economists believe that there will be just a few foreign investors who want to withdraw their capital from the market. Most of them wish for a change in their way of investment.
Louis Nguyen, CEO of the Saigon Asset Management, underlines the reason why foreign investors will continue to invest in the country as they expect to make a quick profit in 1 or 2 years. Vinacapital Group and Dragon Capital has announced their plan to invest US$100-150 million in the Vietnamese stock market.
Marc Djanhji, Research Manager of Bao Viet Securities Company (BVSC), predicts that only a small number of foreign investors will withdraw capital from Vietnam.
He says most of foreign investment funds tend to invest in a specific country, and the amount of capital withdrawn will be small (10-20 percent).
This will not seriously affect investment resources, Marc affirms.
However, it is crucial for Vietnam’s stock market to attract more foreign capital, especially in the face of economic difficulties.
Louis Nguyen proposes the Vietnamese Government take stronger action to contain inflation and reduce bank interest rates.
High inflation and bank interest rates will only keep foreign investors away from Vietnam, Nguyen says.
According to Dragon Capital CEO Dominic Scriven, synchronous measures are needed to maintain and increase foreign indirect investment. He says the promotion of equitization, listing, and information transparence will be able to attract foreign investors and increase businesses’ added value.
Le Dat Chi, head of the financial investment faculty of the HCM City Economics University, says capital investment funds themselves should reconsider their operation to make the best of both opportunities and challenges arising from such a newly-emerging market as Vietnam.
If the fund managers have accurate forecasts, they will be able to buy and re-sell securities at a profit.