Foreign funds are eyeing Vietnam for their disbursement plans

While Vietnamese investors are disappointed as the VN Index did not increase as expected in 2018, foreign investors believe it is the right time to invest in Vietnam’s stocks.

A senior executive of Dragon Capital, a fund management company, told Dau Tu Chung Khoan that he can see positive prospects in the stock market. He said if not counting some shares with high capitalization value and P/E, the average P/E of the Vietnamese market is ‘very attractive’.

The attractive P/E is also what many other large foreign investment funds see.

A fund management company belonging to the world’s top 5 which is managing trillions of dollars worth of assets has recently come to Vietnam to promote investment, rather than carry out passive research on Vietnam’s market from outside.

The investment director of a company which is managing Soros’s investments in Vietnam, noted that Vietnam’s stock market gained big achievements in 2017. In 2018, the market performance was below expectations, but the fund still received strong support from investors.

He said large investors were considering making more disbursements if fund management companies can prove the opportunities are great.

Positive comments about Vietnam’s stock market have also come from regional investors. A Malaysia-based investment fund with the total asset of $500 million said the fund is considering injecting money into Vietnam’s stocks.

A CEO of a Vietnam’s securities company confirmed that the company had working sessions with the fund where the fund’s representative raised detailed questions about money remittances, forex policy, administrative procedures and human resources.

“The moves show that foreign investors are enthusiastic in preparing for a new business period in Vietnam,” he commented.

The biggest interest in Vietnam’s stock market can be seen in Singapore, the financial hub of Southeast Asia.

A Vietnamese financial expert noted that there are a high number of Vietnamese working for large financial institutions in Singapore.

Vietnam is now seen as one of top priority destinations for investment funds in the country because of high GDP and stable growth rates, attractive stock valuation and the expectation that the stock market will be upgraded from frontier into emerging.

However, consultancy firms said there are three big problems that foreign investors need to think carefully about when making investments in Vietnam, namely the limit on foreign ownership ratio; the transparency in corporate management information exposure and languages; administrative procedures and cash inflow/outflow.

The consultancy firms have found that foreign investors have shown high interest in three business fields – banking, real estate and retail.

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Duy Anh