VietNamNet Bridge – It is predicted that in 2011, there will be a greater flow of foreign portfolio investment (FPI) in Vietnam

Louis Nguyen, Chair and Chief Executive Officer of SAM, a fund management company, relates that in 2010, foreign investors said that their biggest worry was the depreciation of the Vietnam dong, while, to invest in Vietnam they have to convert the dollars or euros into Vietnam dong. Besides, the high inflation and the lackluster of the stock market were also factors that made them choose to inject the money in other markets, such as Indonesia, Taiwan, Malaysia or Singapore.

The hope coming from Asia

In 2007, the capital raised by SAM mostly came  from Europe, with 60 percent of from Switzerland and Germany. But in the last two years, the investment capital is mainly sourced from Asia, China, Taiwan or Hong Kong. The biggest partners are forming Hong Kong, according to Louis Nguyen.

Why are Chinese and Hong Kong’s investors pouring their capital into Vietnam? According to him, as financial investors and strategists, they pour money into Vietnam because they can see the profits and the potentials of Vietnam’s market. Besides, they want to spread the risks instead of “putting all eggs into the same basket”. Meanwhile, China is facing difficulties in some fields. For example, Chinese wooden furniture products are subject to high tariffs when entering the US market. Therefore, the investors have cast their eyes to Vietnam.

Besides, Vietnam has come to the final stage of opening the market under the WTO commitments, offering better conditions for foreign investors. This means that more and more enterprises will come to set up production and business bases in Vietnam. As the competition is getting stiffer, existing investment funds are under the pressure of raising funds before new investment funds appear.

“When the market begins stabilizing in the first and second quarter, investment funds will be able to raise more capital” Mr Louis Nguyen says.

Where will the money flow to?

Johan Nyvene, General Director of HCM City Securities Company HSC, notes that last year, the capital from foreign investors flowed mostly to the real estate market, not the stock market.

In order to be able to mobilize capital, investment funds need to address the NAV discount problem. However, this does not mean that they have no other ways to mobilize capital. One of the things they need to do is to change the funds’ structure, not to set up listed funds, but instead set up member funds or unlisted funds.

Raising funds to inject in the listed stocks is no longer enough to persuade the investors. Some funds are planning to mobilize capital and close the funds by the second quarter. They say they are targeting the real estate market and the OTC shares which are going to list on the bourse.

Since December, some investment funds have been investing in real estate companies. Prudential, for example, has invested in Imperia An Phu apartment project developed by Inveskia, while VPH real estate fund of SAM invested five million dollars in C21 real estate company. Khanh has revealed that Prudential will funnel money into four or five more real estate projects by the second quarter of the year.

Khanh said that the quietness of the real estate market has had a big impact on enterprises’ profits  and the efficiency of investment projects. However, “we plan to raise for the capital to establish the second real estate fund in Vietnam,” he reveals.

Louis Nguyen says that in the first or second quarter, SAM will announce another investment fund, which will focus on companies and real estate projects, and consumption companies that plan to list on the bourse.

“We have got the commitments from two or three investors who promise the sums of money big enough to set up a fund,” he said.

Source: Saigon tiep thi