Portfolio investment up

HCM City was the locality with the highest number of enterprises receiving foreign portfolio investment. The investment mode accounted for 60 percent of total indirect investment of the whole country in 2019.

A report from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment showed that foreign investors made 9,842 transactions under the indirect investment mode.

FIA noted that the number of foreign indirect investment deals in HCM City was on the rise, while the number of foreign direct investment (FDI) decreased.

This means that a lot of well-known HCM City-based Vietnamese brands have fallen into foreign hands.

HCM City was the locality with the highest number of enterprises receiving foreign portfolio investment. The investment mode accounted for 60 percent of total indirect investment of the whole country in 2019.

The total number of foreign invested projects licensed in 2019 was 1,320 with the total registered capital of $1.84 billion. If counting the $859 million capital from 309 projects which expanded business and increased investment capita, the total FDI capital in the city in 2019 would be $2.7 billion.

Meanwhile, foreign investors made 5,720 transactions contributing capital or buying into Vietnamese enterprises in the city, with the total contributed capital of $5.59 billion, nearly double the FDI capital.

The number of foreign indirect investment projects in 2019 was higher by 2,437 transactions than that of the year before.

The figures showed that the foreign capital flowing to Vietnam through M&A deals has been increasingly dominant over FDI.

The HCM City Planning and Investment Department did not show which business fields foreign investors wanted the most, but observers noted that they mostly targeted real estate, retail, food and FMCG production, and finance.

Worries

Analysts noted that foreign investors are now rushing to make investment in HCM City via M&As, attributing this to the legal framework favorable for foreign investors to implement M&A transactions.

Besides, the Vietnamese large market with 95 million consumers and increasingly high number of middle-income earners proves to be attractive to investors. M&A is the fastest way for them to penetrate the Vietnamese market. Buying into Vietnamese enterprises will help foreign investors save time and investment cost.

Meanwhile, consultancy experts believe that more and more Vietnamese enterprises want to sell shares to foreign investors as they need more capital to run expansion strategies.

Of these enterprises, many have to sell to foreign investors as they find it impossible to exist in the market with stiff competition, where foreign companies are superior in capital and technology.

In addition, taking over Vietnamese enterprises is believed to be the way for foreign manufacturers to quickly set up their production to supply goods to the US market in the context of the US-China trade war.

Thanh Lich 

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