Thailand
Macroeconomic stability, CP TPP fuels foreign investment to Vietnam stock market
The Hanoitimes – Foreign investors made a net purchase of US$573 million in Vietnam’s stock markets in the first two months of the year thanks to the country’s macroeconomic stability and the signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP TPP) on March 8.
According to a new report of the National Financial Supervisory Committee, of the total, $542 million flowed into the share market and the remaining of $31 million was into the bond market.
“This was fuelled by macroeconomic factors such as stable foreign exchange rate and inflation. Vietnam’s GDP growth is also forecast to surpass 6.8 percent this year,” the committee said.
Besides, the committee also attributed the growth of the stock markets to another positive factor: the signing of the CP TPP on March 8.
The committee projected that the outlook for foreign indirect investment (FII) inflows to Vietnam this year is positive in general, which will partly support the foreign exchange rate.
Together with the FII positive outlook, the country’s trade surplus and the US dollar devaluation in the global market projected for 2018 will help the USD/VND exchange rate inch up by some 1.5-2 percent this year, creating advantages for domestic exports, the committee said.
However, the committee also warned that the growth of the country’s stock markets in 2017 and early months of 2018 was too fast and posed risks, explaining that there was a big gap between the share price hike and the growth rate of listed firms.
Specifically, the committee reported that the share price hike in 2017 was at 48 percent against the 26 percent growth rate of listed firms. Especially, share prices of some big cap companies overheated.
In the report, the committee also recommended the State Securities Commission, in conjunction with the State Bank of Vietnam, to strictly control the securities lending for the stock market’s sustained growth.
To increase the supply source for the stock market and better attract foreign investors, the committee also suggested the government to continuously speed up the equitisation and divestment of state-owned enterprises (SOEs).
Major SOEs should have IPO itineraries early to capitalize on the growth of the stock market, avoiding the IPO to flock in the last period of 2019-2020, it said.
The government also affirmed that it is dramatically accelerating sales of stakes in SOEs, announcing this year’s plan to sell 6.5 times more shares than it offered last year.
Stakes in 245 state companies are up for grabs in 2018, including four scheduled in the first quarter — Binh Son Refining and Petrochemical Co., which operates the only oil refinery in the country, as well as PetroVietnam Oil Corp., PetroVietnam Power Corp. and Hanoi Beer Alcohol & Beverage JSC.
According to Dang Quyet Tien, director general of the Ministry of Finance’s Department of Corporate Finance, the number of enterprises earmarked for equitisation and divestment in 2018 account for over 50 and 46 per cent of the total number planned for 2017-2020.
“Therefore, 2018 can be considered an important year for SOE reform. Nonetheless, the annual equitisation and divestment schedule could be subject to changes as precisely 127 SOEs would be equitised and 406 would be divested by the end of 2020. Personally, I think the schedule depends on the determination of local authorities,” Tien said.
However, Tien expected a positive outlook for the equitisation and divestment this year as VN-Index reached a decade-record of 970 points in 2017 and became one of the world’s fastest growing stock indexes.
Besides, the committee also attributed the growth of the stock markets to another positive factor: the signing of the CP TPP on March 8.
The committee projected that the outlook for foreign indirect investment (FII) inflows to Vietnam this year is positive in general, which will partly support the foreign exchange rate.
Together with the FII positive outlook, the country’s trade surplus and the US dollar devaluation in the global market projected for 2018 will help the USD/VND exchange rate inch up by some 1.5-2 percent this year, creating advantages for domestic exports, the committee said.
However, the committee also warned that the growth of the country’s stock markets in 2017 and early months of 2018 was too fast and posed risks, explaining that there was a big gap between the share price hike and the growth rate of listed firms.
Specifically, the committee reported that the share price hike in 2017 was at 48 percent against the 26 percent growth rate of listed firms. Especially, share prices of some big cap companies overheated.
In the report, the committee also recommended the State Securities Commission, in conjunction with the State Bank of Vietnam, to strictly control the securities lending for the stock market’s sustained growth.
To increase the supply source for the stock market and better attract foreign investors, the committee also suggested the government to continuously speed up the equitisation and divestment of state-owned enterprises (SOEs).
Major SOEs should have IPO itineraries early to capitalize on the growth of the stock market, avoiding the IPO to flock in the last period of 2019-2020, it said.
The government also affirmed that it is dramatically accelerating sales of stakes in SOEs, announcing this year’s plan to sell 6.5 times more shares than it offered last year.
Stakes in 245 state companies are up for grabs in 2018, including four scheduled in the first quarter — Binh Son Refining and Petrochemical Co., which operates the only oil refinery in the country, as well as PetroVietnam Oil Corp., PetroVietnam Power Corp. and Hanoi Beer Alcohol & Beverage JSC.
According to Dang Quyet Tien, director general of the Ministry of Finance’s Department of Corporate Finance, the number of enterprises earmarked for equitisation and divestment in 2018 account for over 50 and 46 per cent of the total number planned for 2017-2020.
“Therefore, 2018 can be considered an important year for SOE reform. Nonetheless, the annual equitisation and divestment schedule could be subject to changes as precisely 127 SOEs would be equitised and 406 would be divested by the end of 2020. Personally, I think the schedule depends on the determination of local authorities,” Tien said.
However, Tien expected a positive outlook for the equitisation and divestment this year as VN-Index reached a decade-record of 970 points in 2017 and became one of the world’s fastest growing stock indexes.
Source: http://www.hanoitimes.vn/investment/2018/03/81E0C2CD/macroeconomic-stability-cp-tpp-fuels-foreign-investment-to-vn-stock-market/