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Foreign funds grab opportunities to invest in Vietnamese companies
The Hanoitimes – Vietnamese companies have remained in the taste of foreign investment funds despite a rising trend of capital withdrawal from emerging and frontier markets.
A group of investment funds managed by Dragon Capital has recently bought 4.21 million shares of Dat Xanh Group (DXG) to raise its ownership in the Vietnamese real estate developer to 19.03 percent. The group has bought nearly 11 million DXG shares since the beginning of July.
Earlier, Dragon Capital also announced that it successfully bought 813,110 shares of Vietnam Electrical Equipment JSC (GEX) to lift its ownership to 13.6 million shares and become a major shareholder, holding 5.05 percent of the charter capital of Vietnam’s leading electrical wire and cable manufacturer.
Dragon Capital’s remaining holding in GEX is in the hands of six other member funds, including Norges Bank (4.24 million shares–1.58 percent), Amersham Industries (2.85 million shares), Viola Ltd. (2 million shares), Idris (1.7 million shares), Samsung Vietnam Securities Master Investment Trust (668,000 shares), and Aquila SPC (550,000 shares).
In additional to Dragon Capital, Grinling International Limited bought 154,100 GEX shares while Hanoi Investment Holdings Limited bought another 659,000 shares.
In the last few months, Dragon Capital has also invested in Vietnamese leading brands such as Vinhomes, Sabeco, Masan Group, PNJ, CEN Land and Binh Son Refinery.
Other investment funds have also capitalized on the market movement to buy shares in Vietnamese companies.
On July 5, Yurie Vietnam Securities Investment Trust (Stock) also poured money into Vietnamese securities company VNDirect, raising its ownership to 10.8 million shares, becoming a major shareholder with more than 5 percent of charter capital.
On the same day, the Korean investment fund also bought 79,000 million shares of PetroVietnam Transport (PVT). Yurie Vietnam Securities’ ownership at the Vietnamese company was nearly 17.4 million shares, equal to 6.17 percent of PVT’s charter capital.
In early July, Kwe Beteligungen AG continued to raise its ownership at Viconship (VSC) to 7.73 percent through the purchase of 385,000 VSC shares. Earlier, the Swiss investment fund in March also bought 80,000 VSC shares to become a large shareholder.
Market reforms attract investors
According to experts, a factor steering funds’ attention toward Vietnam is widespread capital market reforms. The nation’s reforms have focused on the public sector, including recently privatizing state-owned enterprise. The number of SOEs is projected to fall to around 120 by 2020 from 1,500 in 2010.
The government had intended to privatize state companies more gradually, but is now looking to speed up the process, in part to meet a projected US$9 billion shortfall in its 2018 budget. Prime Minister Nguyen Xuan Phuc has pitched these IPOs at numerous local and overseas business conferences, describing them as “opportunities for private and foreign investors to hold shares in Vietnamese enterprises.”
These efforts are being recognized internationally. According to Ousmane Dione, the World Bank country director for Vietnam, the recent progress in enhancing Vietnam’s business climate has been very encouraging and clearly reflects the government’s strong commitment to narrow the gap with top performing economies.
Hoang Viet Phuong from Saigon Securities Incorporation (SSI) forecast that Vietnam’s stock market would grow this year thanks to the IPO and listing of SOEs.
Analysts also believed that the cash flow from overseas will continue rising this year if the USD/VND exchange rate is not weakened by more than 2% and the inflation rate is at 4%.
Besides, while the projected growth rates for China and India are even higher, experts pointed out that with shares already trading at relatively high levels in those countries, big returns on investments are less likely.
In Southeast Asia including Vietnam, on the other hand, investors have more opportunities to invest in promising companies without breaking the bank. As a result, high yields can be expected in three to five years, they forecast.
Dragon Capital’s remaining holding in GEX is in the hands of six other member funds, including Norges Bank (4.24 million shares–1.58 percent), Amersham Industries (2.85 million shares), Viola Ltd. (2 million shares), Idris (1.7 million shares), Samsung Vietnam Securities Master Investment Trust (668,000 shares), and Aquila SPC (550,000 shares).
In additional to Dragon Capital, Grinling International Limited bought 154,100 GEX shares while Hanoi Investment Holdings Limited bought another 659,000 shares.
In the last few months, Dragon Capital has also invested in Vietnamese leading brands such as Vinhomes, Sabeco, Masan Group, PNJ, CEN Land and Binh Son Refinery.
Other investment funds have also capitalized on the market movement to buy shares in Vietnamese companies.
On July 5, Yurie Vietnam Securities Investment Trust (Stock) also poured money into Vietnamese securities company VNDirect, raising its ownership to 10.8 million shares, becoming a major shareholder with more than 5 percent of charter capital.
On the same day, the Korean investment fund also bought 79,000 million shares of PetroVietnam Transport (PVT). Yurie Vietnam Securities’ ownership at the Vietnamese company was nearly 17.4 million shares, equal to 6.17 percent of PVT’s charter capital.
In early July, Kwe Beteligungen AG continued to raise its ownership at Viconship (VSC) to 7.73 percent through the purchase of 385,000 VSC shares. Earlier, the Swiss investment fund in March also bought 80,000 VSC shares to become a large shareholder.
Market reforms attract investors
According to experts, a factor steering funds’ attention toward Vietnam is widespread capital market reforms. The nation’s reforms have focused on the public sector, including recently privatizing state-owned enterprise. The number of SOEs is projected to fall to around 120 by 2020 from 1,500 in 2010.
The government had intended to privatize state companies more gradually, but is now looking to speed up the process, in part to meet a projected US$9 billion shortfall in its 2018 budget. Prime Minister Nguyen Xuan Phuc has pitched these IPOs at numerous local and overseas business conferences, describing them as “opportunities for private and foreign investors to hold shares in Vietnamese enterprises.”
These efforts are being recognized internationally. According to Ousmane Dione, the World Bank country director for Vietnam, the recent progress in enhancing Vietnam’s business climate has been very encouraging and clearly reflects the government’s strong commitment to narrow the gap with top performing economies.
Hoang Viet Phuong from Saigon Securities Incorporation (SSI) forecast that Vietnam’s stock market would grow this year thanks to the IPO and listing of SOEs.
Analysts also believed that the cash flow from overseas will continue rising this year if the USD/VND exchange rate is not weakened by more than 2% and the inflation rate is at 4%.
Besides, while the projected growth rates for China and India are even higher, experts pointed out that with shares already trading at relatively high levels in those countries, big returns on investments are less likely.
In Southeast Asia including Vietnam, on the other hand, investors have more opportunities to invest in promising companies without breaking the bank. As a result, high yields can be expected in three to five years, they forecast.
Source: http://www.hanoitimes.vn/investment/opportunities/2018/07/81E0CA51/foreign-funds-grab-opportunities-to-invest-in-vietnamese-companies/