Chinese funds pour money into Vietnamese market

Many Chinese funds are pouring capital into the Vietnamese stock market because of low valuations and further loosening of foreign ownership in the near future.

Chinese funds pour money into Vietnamese market

Taiwan-based CTBC Vietnam Equity Fund has registered to buy 21 million VFMVN Diamond ETF fund certificates from September 7 to October 6 to increase its ownership. Besides CTBC Vietnam Equity Fund, no foreign fund has bought this fund’s certificates.

CTBC Vietnam Equity Fund has also recently bought 220,000 shares of Khang Dien House Trading and Investment JSC (KDH).

It is a newbie in the Vietnamese capital market, established at the end of August this year. The fund is owned by CTBC Investments, one of the leading asset management companies in Taiwan. Dragon Capital is the advisor for this new fund. Its committed capital is VND3.7 trillion (US$160 million).

Dragon Capital said it would support CTBC Vietnam Equity Fund to build a portfolio of Vietnamese listed stocks, providing ongoing research and recommendations on stocks. The fund targets to invest in companies listed on HoSE, HNX with potential growth, besides fund certificates.

CTBC Investments is a member of CTBC Financial Holdings, founded by the Koo family, one of the most powerful families in Taiwan. CTBC Financial Holdings is one of the leading financial groups in Taiwan managing eight business segments including banking, securities and venture capital.

By the end of 2019, CTBC Financial Holdings had total assets of more than $207 billion. Some major shareholders of this unit are Singapore GIC Investment Fund, BlackRock Fund Advisor, Fubon Life Insurance, The Vanguard Group and Norges Bank.

Norges Bank is Norway's central bank which has invested $500 million in dozens of blue-chip stocks on the Vietnamese market such as dairy firm Vinamilk (VNM), PetroVietnam Fertiliser and Chemicals Coporation (DPM), steelmaker Hoa Phat Group (HPG) and FPT Corporation (FPT), since 2013. However, Norges Bank always kept the ownership rate of no more than 3 per cent in all stocks. Dragon Capital is also the portfolio manager of Norges Bank in Vietnam.

Another branch of CTBC Financial Holdings, which has been present in Viet Nam since 2002, is CTBC Bank. It is located in HCM City with an operating term of 99 years.

In January this year, Tianhong Asset Management, an investment fund owned by Ant Financial - in which Chinese e-commerce giant Alibaba owns 51 per cent - launched a domestic investment fund named China QDII to invest in the Vietnamese stock market.

During the IPO, the fund raised 200 million yuan ($29 million).

Tianhong AM manages 48 member funds, investing in big data and AI. Ant Financial has been expanding into Asian and European markets. Some of its big deals included the acquirement of helloPay and investment in Paytm.

 

In Viet Nam, Tianhong AM is reported to have bought eMonkey e-wallet owned by M-Pay, with a holding rate of over 50 per cent.

Long-term growth

Market analysts said that China is on track to overtake the US to become the world's largest foreign investor.

The disruption in the market because of COVID-19 has prompted funds to pour capital into Chinese stocks and investment funds. Accordingly, raising capital and setting up a new fund are easier.

Shenzhen PaiPaiWang Investment & Management data shows that in July this year, the number of newly opened funds increased to 1,500 funds, higher than the total number of 1,217 in the first 6 months.

New capital inflows could give a boost to domestic and neighbouring stock markets outside of China including Viet Nam.

CTBC Vietnam Equity Fund focuses on Viet Nam's high economic growth opportunities in the future, selecting leading companies with potential for profit growth. That is the reason why no single stock accounts for more than 10 per cent of the fund's portfolio.

In Viet Nam, the fund targets fast-growing industries such as domestic consumption, finance and real estate. Meanwhile, Tianhong Asset Management Fund seeks to invest in businesses, start-ups in the e-payment ecosystem, e-commerce, distribution, retail and logistics.

According to SSI Securities Incorporation, the control over COVID-19 as well as the effectiveness of stimulus measures by the Vietnamese Government play a decisive role in market sentiment.

This is still the main factor that governs the movements of capital inflow into Viet Nam's stock market in the future, SSI said. — VNS

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