The Vietnam stock market returns to its position as an important capital mobilisation channel, when capital flows not only come from domestic investors, Vietnam Chamber of Commerce and Industry says on its website.
Although statistics for November have shown that in this month, the increase of 10.4 percent and 22.74 percent of VN-Index and HNX-Index respectively is attributed mainly to domestic capital flows, the role of foreign investors in the market has not become minor.
* Organisational investors: Running out of “room”.
In November 2013, foreign investors have a highest net purchase of 9,900 billion VND in the stock market. The peak net purchase of foreign investors shows high expectation of returns. Moreover, the presence of foreign investors in the stock market is also revealed in the number of new trading codes for individuals this year.
According to statistics of Vietnam Securities Depositary (VSD), in November, total trading code of individual and organisational foreign investors increased by 604 codes to 16,605 codes. This is a gradual and stable increase since 2011, including the period when there was a fluctuation of FDI flows into Vietnam in 2011-2012.
In 2012, there were 255 codes given to organizational investors, while in 11 months of 2013, the figure has been 229. With 14,397 individual investors and 2,208 organisational investors from foreign countries, their presence still is assessed as a minor group, however, compared to modest size of the stock market, they are considered an important factor for the market to raise transaction and liquidity.
According to Bloomberg, compared to regional stock markets, Vietnam stock market has an advantage. Its average market price (P) to earnings per share (E) PE of stocks listed in the Ho Chi Minh Stock Exchange is about 12.7 – the lowest level, which turns Vietnam market into the cheapest one in the Southeast Asia. Except Japan, with 21 percent, VN-Index has increased most rapidly in the Asia since the beginning of this year.
Also referring to Bloomberg, in profitable Vietnam enterprises, foreign investors have bought totally room of stock and therefore, the volume of stocks of foreign investors in the Vietnam stock market has reached its peak since 2008.
However, the Ernst & Young assessed that there is no sign of strong entering of funds in this market. It is an opportunity for Vietnam to raise number of institutional investors in the future.
Evaluating the market in the last week of November, FPTS revealed unofficial information that the market will receive a new capital flow from 6 foreigners with value of about 300 million USD. Although the information is acknowledged formally, it is really a supporting factor of the market, because the value of this capital flow is much higher than 220 million USD that foreigners have invested into the market in November. Therefore, if this information is true, it will have a long term meaning.
* TTP, 60 percent and indices
Foreign investment capital will increasingly inflow to securities, Vietnamese enterprises and domestic investors have more forecast. Plan’s indices for 2014 approved by National Assembly show that the goal to steer the economy toward sustainable development may be foreseen, so preventing risks and improving the pessimism of economic development in 2013.
Specifically, with the targets of 5.8 percent of GDP growth, higher than that in 2013 and 7 percent of inflation, enterprises and investors may forecast movement of monetary - interest policy 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 earnings expectation - increases six percent compared to that in 2013.
In addition to the expectation of Vietnam’s economy in 2014, according to opinion of Analysis Department of MB Securities (MBS), the Trans-Pacific Partnership - TPP “will be a hike to securities market when foreign capital inflows to Vietnam as soon as TPP is approved”. However, MBS is concerned that there is little likelihood that the TTP would be approved within 2014 because many disagreements still exist among countries”.
Based on the forecast of unadjusted interest rates, the ability of stimulation package to real estate, securities or economy will not happen regarding to the prudent economic management in 2014 of the Government, MBS has also announced its prediction that securities is still considered as a good liquidity channel, and especially, it mainly depends on the tendency of foreign capital inflowing to the market.
Because, from inside, the economy does not show its improvement as well as the risk of loosening monetary policy, and from outside, super loosening monetary packages of developed economies have also withdrawn, foreign investors will strongly believe in the development expectation of enterprises in such economy.
There is also another important factor to increase foreign capital flow when the draft on raising room for foreign investors in Vietnamese enterprises will be approved by the Government. Accordingly, when room for foreign investors rise from 49 percent to 60 percent, even to 100 percent of non-voting shares, they will have opportunities to possess room in profitable enterprises, usually bluechips with high market value, large room like Hau Giang Pharmacy, Vinamilk or Phu My Fertilizer.
Moreover, the withdrawal of state capital in well operating enterprises to have resources to improve productivity of economic restructuring will create more opportunities for foreign investors, an investment expert said. Besides, with internal improvement of the securities market has been attracting foreign investors.
In the beginning of December, the Hanoi stock exchange has issued 3 new indexes, which are size index, sector index and HNX FF Index. HNX FF Index will help investors identify investment opportunities better, especially HNX FF Index includes many listed stocks in HNX with free exchange rate up to 5 percent.
According to Andy Ho – CEO of VinaCapital, there is a clear trend of accumulating stocks and taking opportunities in Vietnam recently of foreign investors, which could be seen through the largest foreign fund management in Vietnam – Vina Capital: By 30th September 2013, Vina Capital Vietnam Opportunity Fund Limited had net value of 753 million USD, rate of net accumulation value to investment certificate of 5 years is 36 percent. Since November 2011, the fund has distributed 137.3 million USD through programmes of repurchasing stocks and its target of NAV/investment certificates in 2014 is 5 percent.
Another fund, Vietnam Infrastructure Limited of Vina Capital with NAV of 192.7 million USD, concentrates on fields of communication, energy, agriculture and infrastructure. For 9 months of 2013, the fund enjoyed increase of list investment to 31.8 percent compared to 24.5 percent in the previous year. The fund gains its highest returns rate in listed stock channel in the stock market and in 2014, this channel will also be one of channels that the fund enhances investment and searches for private investment opportunities in growing segments of the economy, securitized enterprises and several real estate projects.-VNA
Although statistics for November have shown that in this month, the increase of 10.4 percent and 22.74 percent of VN-Index and HNX-Index respectively is attributed mainly to domestic capital flows, the role of foreign investors in the market has not become minor.
* Organisational investors: Running out of “room”.
In November 2013, foreign investors have a highest net purchase of 9,900 billion VND in the stock market. The peak net purchase of foreign investors shows high expectation of returns. Moreover, the presence of foreign investors in the stock market is also revealed in the number of new trading codes for individuals this year.
According to statistics of Vietnam Securities Depositary (VSD), in November, total trading code of individual and organisational foreign investors increased by 604 codes to 16,605 codes. This is a gradual and stable increase since 2011, including the period when there was a fluctuation of FDI flows into Vietnam in 2011-2012.
In 2012, there were 255 codes given to organizational investors, while in 11 months of 2013, the figure has been 229. With 14,397 individual investors and 2,208 organisational investors from foreign countries, their presence still is assessed as a minor group, however, compared to modest size of the stock market, they are considered an important factor for the market to raise transaction and liquidity.
According to Bloomberg, compared to regional stock markets, Vietnam stock market has an advantage. Its average market price (P) to earnings per share (E) PE of stocks listed in the Ho Chi Minh Stock Exchange is about 12.7 – the lowest level, which turns Vietnam market into the cheapest one in the Southeast Asia. Except Japan, with 21 percent, VN-Index has increased most rapidly in the Asia since the beginning of this year.
Also referring to Bloomberg, in profitable Vietnam enterprises, foreign investors have bought totally room of stock and therefore, the volume of stocks of foreign investors in the Vietnam stock market has reached its peak since 2008.
However, the Ernst & Young assessed that there is no sign of strong entering of funds in this market. It is an opportunity for Vietnam to raise number of institutional investors in the future.
Evaluating the market in the last week of November, FPTS revealed unofficial information that the market will receive a new capital flow from 6 foreigners with value of about 300 million USD. Although the information is acknowledged formally, it is really a supporting factor of the market, because the value of this capital flow is much higher than 220 million USD that foreigners have invested into the market in November. Therefore, if this information is true, it will have a long term meaning.
* TTP, 60 percent and indices
Foreign investment capital will increasingly inflow to securities, Vietnamese enterprises and domestic investors have more forecast. Plan’s indices for 2014 approved by National Assembly show that the goal to steer the economy toward sustainable development may be foreseen, so preventing risks and improving the pessimism of economic development in 2013.
Specifically, with the targets of 5.8 percent of GDP growth, higher than that in 2013 and 7 percent of inflation, enterprises and investors may forecast movement of monetary - interest policy 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 earnings expectation - increases six percent compared to that in 2013.
In addition to the expectation of Vietnam’s economy in 2014, according to opinion of Analysis Department of MB Securities (MBS), the Trans-Pacific Partnership - TPP “will be a hike to securities market when foreign capital inflows to Vietnam as soon as TPP is approved”. However, MBS is concerned that there is little likelihood that the TTP would be approved within 2014 because many disagreements still exist among countries”.
Based on the forecast of unadjusted interest rates, the ability of stimulation package to real estate, securities or economy will not happen regarding to the prudent economic management in 2014 of the Government, MBS has also announced its prediction that securities is still considered as a good liquidity channel, and especially, it mainly depends on the tendency of foreign capital inflowing to the market.
Because, from inside, the economy does not show its improvement as well as the risk of loosening monetary policy, and from outside, super loosening monetary packages of developed economies have also withdrawn, foreign investors will strongly believe in the development expectation of enterprises in such economy.
There is also another important factor to increase foreign capital flow when the draft on raising room for foreign investors in Vietnamese enterprises will be approved by the Government. Accordingly, when room for foreign investors rise from 49 percent to 60 percent, even to 100 percent of non-voting shares, they will have opportunities to possess room in profitable enterprises, usually bluechips with high market value, large room like Hau Giang Pharmacy, Vinamilk or Phu My Fertilizer.
Moreover, the withdrawal of state capital in well operating enterprises to have resources to improve productivity of economic restructuring will create more opportunities for foreign investors, an investment expert said. Besides, with internal improvement of the securities market has been attracting foreign investors.
In the beginning of December, the Hanoi stock exchange has issued 3 new indexes, which are size index, sector index and HNX FF Index. HNX FF Index will help investors identify investment opportunities better, especially HNX FF Index includes many listed stocks in HNX with free exchange rate up to 5 percent.
According to Andy Ho – CEO of VinaCapital, there is a clear trend of accumulating stocks and taking opportunities in Vietnam recently of foreign investors, which could be seen through the largest foreign fund management in Vietnam – Vina Capital: By 30th September 2013, Vina Capital Vietnam Opportunity Fund Limited had net value of 753 million USD, rate of net accumulation value to investment certificate of 5 years is 36 percent. Since November 2011, the fund has distributed 137.3 million USD through programmes of repurchasing stocks and its target of NAV/investment certificates in 2014 is 5 percent.
Another fund, Vietnam Infrastructure Limited of Vina Capital with NAV of 192.7 million USD, concentrates on fields of communication, energy, agriculture and infrastructure. For 9 months of 2013, the fund enjoyed increase of list investment to 31.8 percent compared to 24.5 percent in the previous year. The fund gains its highest returns rate in listed stock channel in the stock market and in 2014, this channel will also be one of channels that the fund enhances investment and searches for private investment opportunities in growing segments of the economy, securitized enterprises and several real estate projects.-VNA
