The Vietnam stock market returns to its position as an important capitalmobilisation channel, when capital flows not only come from domesticinvestors, Vietnam Chamber of Commerce and Industry says on its website.
Although statistics for November have shownthat in this month, the increase of 10.4 percent and 22.74 percent ofVN-Index and HNX-Index respectively is attributed mainly to domesticcapital flows, the role of foreign investors in the market has notbecome minor.
* Organisational investors: Running out of “room”.
In November 2013, foreign investors have a highest net purchase of9,900 billion VND in the stock market. The peak net purchase of foreigninvestors shows high expectation of returns. Moreover, the presence offoreign investors in the stock market is also revealed in the number ofnew trading codes for individuals this year.
According to statistics of Vietnam Securities Depositary (VSD), inNovember, total trading code of individual and organisational foreigninvestors increased by 604 codes to 16,605 codes. This is a gradual andstable increase since 2011, including the period when there was afluctuation of FDI flows into Vietnam in 2011-2012.
In 2012, there were 255 codes given to organizational investors, whilein 11 months of 2013, the figure has been 229. With 14,397 individualinvestors and 2,208 organisational investors from foreign countries,their presence still is assessed as a minor group, however, compared tomodest size of the stock market, they are considered an important factorfor the market to raise transaction and liquidity.
According to Bloomberg, compared to regional stock markets, Vietnamstock market has an advantage. Its average market price (P) to earningsper share (E) PE of stocks listed in the Ho Chi Minh Stock Exchange isabout 12.7 – the lowest level, which turns Vietnam market into thecheapest one in the Southeast Asia. Except Japan, with 21 percent,VN-Index has increased most rapidly in the Asia since the beginning ofthis year.
Also referring to Bloomberg, inprofitable Vietnam enterprises, foreign investors have bought totallyroom of stock and therefore, the volume of stocks of foreign investorsin the Vietnam stock market has reached its peak since 2008.
However, the Ernst & Young assessed that there is no sign ofstrong entering of funds in this market. It is an opportunity forVietnam to raise number of institutional investors in the future.
Evaluating the market in the last week of November, FPTS revealedunofficial information that the market will receive a new capital flowfrom 6 foreigners with value of about 300 million USD. Although theinformation is acknowledged formally, it is really a supporting factorof the market, because the value of this capital flow is much higherthan 220 million USD that foreigners have invested into the market inNovember. Therefore, if this information is true, it will have a longterm meaning.
* TTP, 60 percent and indices
Foreign investment capital will increasingly inflow to securities,Vietnamese enterprises and domestic investors have more forecast. Plan’sindices for 2014 approved by National Assembly show that the goal tosteer the economy toward sustainable development may be foreseen, sopreventing risks and improving the pessimism of economic development in2013.
Specifically, with the targets of 5.8 percentof GDP growth, higher than that in 2013 and 7 percent of inflation,enterprises and investors may forecast movement of monetary - interestpolicy in following year. Therefore, interest rate will not increase,and with its current low rate - the key to required yield of investor -will not increase, while GDP growth - the key to enterprises earningsexpectation - increases six percent compared to that in 2013.
In addition to the expectation of Vietnam’s economy in 2014, accordingto opinion of Analysis Department of MB Securities (MBS), theTrans-Pacific Partnership - TPP “will be a hike to securities marketwhen foreign capital inflows to Vietnam as soon as TPP is approved”.However, MBS is concerned that there is little likelihood that the TTPwould be approved within 2014 because many disagreements still existamong countries”.
Based on the forecast ofunadjusted interest rates, the ability of stimulation package to realestate, securities or economy will not happen regarding to the prudenteconomic management in 2014 of the Government, MBS has also announcedits prediction that securities is still considered as a good liquiditychannel, and especially, it mainly depends on the tendency of foreigncapital inflowing to the market.
Because, frominside, the economy does not show its improvement as well as the risk ofloosening monetary policy, and from outside, super loosening monetarypackages of developed economies have also withdrawn, foreign investorswill strongly believe in the development expectation of enterprises insuch economy.
There is also another importantfactor to increase foreign capital flow when the draft on raising roomfor foreign investors in Vietnamese enterprises will be approved by theGovernment. Accordingly, when room for foreign investors rise from 49percent to 60 percent, even to 100 percent of non-voting shares, theywill have opportunities to possess room in profitable enterprises,usually bluechips with high market value, large room like Hau GiangPharmacy, Vinamilk or Phu My Fertilizer.
Moreover,the withdrawal of state capital in well operating enterprises to haveresources to improve productivity of economic restructuring will createmore opportunities for foreign investors, an investment expert said.Besides, with internal improvement of the securities market has beenattracting foreign investors.
In the beginning ofDecember, the Hanoi stock exchange has issued 3 new indexes, which aresize index, sector index and HNX FF Index. HNX FF Index will helpinvestors identify investment opportunities better, especially HNX FFIndex includes many listed stocks in HNX with free exchange rate up to 5percent.
According to Andy Ho – CEO of VinaCapital,there is a clear trend of accumulating stocks and taking opportunitiesin Vietnam recently of foreign investors, which could be seen throughthe largest foreign fund management in Vietnam – Vina Capital: By 30thSeptember 2013, Vina Capital Vietnam Opportunity Fund Limited had netvalue of 753 million USD, rate of net accumulation value to investmentcertificate of 5 years is 36 percent. Since November 2011, the fund hasdistributed 137.3 million USD through programmes of repurchasing stocksand its target of NAV/investment certificates in 2014 is 5 percent.
Another fund, Vietnam Infrastructure Limited of Vina Capital with NAVof 192.7 million USD, concentrates on fields of communication, energy,agriculture and infrastructure. For 9 months of 2013, the fund enjoyedincrease of list investment to 31.8 percent compared to 24.5 percent inthe previous year. The fund gains its highest returns rate in listedstock channel in the stock market and in 2014, this channel will also beone of channels that the fund enhances investment and searches forprivate investment opportunities in growing segments of the economy,securitized enterprises and several real estate projects.-VNA
Although statistics for November have shownthat in this month, the increase of 10.4 percent and 22.74 percent ofVN-Index and HNX-Index respectively is attributed mainly to domesticcapital flows, the role of foreign investors in the market has notbecome minor.
* Organisational investors: Running out of “room”.
In November 2013, foreign investors have a highest net purchase of9,900 billion VND in the stock market. The peak net purchase of foreigninvestors shows high expectation of returns. Moreover, the presence offoreign investors in the stock market is also revealed in the number ofnew trading codes for individuals this year.
According to statistics of Vietnam Securities Depositary (VSD), inNovember, total trading code of individual and organisational foreigninvestors increased by 604 codes to 16,605 codes. This is a gradual andstable increase since 2011, including the period when there was afluctuation of FDI flows into Vietnam in 2011-2012.
In 2012, there were 255 codes given to organizational investors, whilein 11 months of 2013, the figure has been 229. With 14,397 individualinvestors and 2,208 organisational investors from foreign countries,their presence still is assessed as a minor group, however, compared tomodest size of the stock market, they are considered an important factorfor the market to raise transaction and liquidity.
According to Bloomberg, compared to regional stock markets, Vietnamstock market has an advantage. Its average market price (P) to earningsper share (E) PE of stocks listed in the Ho Chi Minh Stock Exchange isabout 12.7 – the lowest level, which turns Vietnam market into thecheapest one in the Southeast Asia. Except Japan, with 21 percent,VN-Index has increased most rapidly in the Asia since the beginning ofthis year.
Also referring to Bloomberg, inprofitable Vietnam enterprises, foreign investors have bought totallyroom of stock and therefore, the volume of stocks of foreign investorsin the Vietnam stock market has reached its peak since 2008.
However, the Ernst & Young assessed that there is no sign ofstrong entering of funds in this market. It is an opportunity forVietnam to raise number of institutional investors in the future.
Evaluating the market in the last week of November, FPTS revealedunofficial information that the market will receive a new capital flowfrom 6 foreigners with value of about 300 million USD. Although theinformation is acknowledged formally, it is really a supporting factorof the market, because the value of this capital flow is much higherthan 220 million USD that foreigners have invested into the market inNovember. Therefore, if this information is true, it will have a longterm meaning.
* TTP, 60 percent and indices
Foreign investment capital will increasingly inflow to securities,Vietnamese enterprises and domestic investors have more forecast. Plan’sindices for 2014 approved by National Assembly show that the goal tosteer the economy toward sustainable development may be foreseen, sopreventing risks and improving the pessimism of economic development in2013.
Specifically, with the targets of 5.8 percentof GDP growth, higher than that in 2013 and 7 percent of inflation,enterprises and investors may forecast movement of monetary - interestpolicy in following year. Therefore, interest rate will not increase,and with its current low rate - the key to required yield of investor -will not increase, while GDP growth - the key to enterprises earningsexpectation - increases six percent compared to that in 2013.
In addition to the expectation of Vietnam’s economy in 2014, accordingto opinion of Analysis Department of MB Securities (MBS), theTrans-Pacific Partnership - TPP “will be a hike to securities marketwhen foreign capital inflows to Vietnam as soon as TPP is approved”.However, MBS is concerned that there is little likelihood that the TTPwould be approved within 2014 because many disagreements still existamong countries”.
Based on the forecast ofunadjusted interest rates, the ability of stimulation package to realestate, securities or economy will not happen regarding to the prudenteconomic management in 2014 of the Government, MBS has also announcedits prediction that securities is still considered as a good liquiditychannel, and especially, it mainly depends on the tendency of foreigncapital inflowing to the market.
Because, frominside, the economy does not show its improvement as well as the risk ofloosening monetary policy, and from outside, super loosening monetarypackages of developed economies have also withdrawn, foreign investorswill strongly believe in the development expectation of enterprises insuch economy.
There is also another importantfactor to increase foreign capital flow when the draft on raising roomfor foreign investors in Vietnamese enterprises will be approved by theGovernment. Accordingly, when room for foreign investors rise from 49percent to 60 percent, even to 100 percent of non-voting shares, theywill have opportunities to possess room in profitable enterprises,usually bluechips with high market value, large room like Hau GiangPharmacy, Vinamilk or Phu My Fertilizer.
Moreover,the withdrawal of state capital in well operating enterprises to haveresources to improve productivity of economic restructuring will createmore opportunities for foreign investors, an investment expert said.Besides, with internal improvement of the securities market has beenattracting foreign investors.
In the beginning ofDecember, the Hanoi stock exchange has issued 3 new indexes, which aresize index, sector index and HNX FF Index. HNX FF Index will helpinvestors identify investment opportunities better, especially HNX FFIndex includes many listed stocks in HNX with free exchange rate up to 5percent.
According to Andy Ho – CEO of VinaCapital,there is a clear trend of accumulating stocks and taking opportunitiesin Vietnam recently of foreign investors, which could be seen throughthe largest foreign fund management in Vietnam – Vina Capital: By 30thSeptember 2013, Vina Capital Vietnam Opportunity Fund Limited had netvalue of 753 million USD, rate of net accumulation value to investmentcertificate of 5 years is 36 percent. Since November 2011, the fund hasdistributed 137.3 million USD through programmes of repurchasing stocksand its target of NAV/investment certificates in 2014 is 5 percent.
Another fund, Vietnam Infrastructure Limited of Vina Capital with NAVof 192.7 million USD, concentrates on fields of communication, energy,agriculture and infrastructure. For 9 months of 2013, the fund enjoyedincrease of list investment to 31.8 percent compared to 24.5 percent inthe previous year. The fund gains its highest returns rate in listedstock channel in the stock market and in 2014, this channel will also beone of channels that the fund enhances investment and searches forprivate investment opportunities in growing segments of the economy,securitized enterprises and several real estate projects.-VNA
