Saturday, September 19, 2020 7:30:40 PM - Markets open
VN-INDEX 900.95 +6.91/+0.77%
HNX-INDEX 129.20 +0.73/+0.57%
UPCOM-INDEX 60.59 +0.72/+1.20%
Reforms needed to attract foreign portfolio investment: fund manager
VietNamPlus - 6/8/2020 3:40:24 PM
 (0 ratings. You must sign in to rate.)
Vietnam needs effective changes and reforms to attract more foreign portfolio investment, Andy Ho, chief investment officer of investment fund VinaCapital, has said.
 
The country had an opportunity to attract inflows into stocks, bonds, private equity, and venture capital, he said.
 
The pandemic had hit a lot of economies, and central banks around the world were likely to print 6 trillion USD worth of money for so-called “quantitative easing” programmes to support their economies.
 
“And some of that money will inevitably leak out of developed markets and into frontier and emerging markets in search of higher investment returns. How do we get some of this money into Vietnam in the form of foreign indirect investment?”
 
Andy Ho believed that investors in developed markets were still very attracted to Vietnam because it “provides returns that are not available to them in their countries”.
 
“In their countries, bonds are trading at negative interest rates, term deposits interest rates are negative and dividend yields are coming down to 1-2 percent.
 
“Therefore, they look at places like Vietnam where we have dividend yields of 3-4 percent, bond yields of 3-4 percent and term deposits interest rates of 6-7 percent. So the returns in Vietnam are tremendous.”
 
Vietnam had a very stable political and economic environment and forex market, and half its population was under 35 with rising incomes and purchasing power.
 
For years, Vietnam had been an attractive destination for foreign investors who were enamoured of its growth prospects and other factors.
 
But more reforms were needed to become more attractive.
 
Foreign investors constantly lamented about the limited number of large, high-quality, high-growth companies for them to invest in.
 
To solve this problem, the Government needs to equitise more of the country’s premier companies, such as the telecommunications companies (Viettel, Mobifone), Electricity Vietnam, and PetroVietnam.
 
Furthermore, the country's stock market was dominated by banking, real estate and consumer stocks that accounted for about 70 percent of the market cap, whereas foreign investors were typically interested in diversifying their holdings to a wide range of sectors.
 
Besides, the biggest “market access” issue that foreign investors were unhappy with in Vietnam was foreign ownership limits (FOL).
 
The FOL law was partly liberalised in 2015, but only 82 companies (out of 1,700 listed companies) had actually raised their FOLs, an embarrassingly small number and a major red flag to foreign investors considering investing in Viêt Nam’s stock market.
 
There were currently 30 Vietnamese stocks that had reached full FOL, meaning there were no more shares available for foreign investors to buy.
 
If a foreign investor wanted to buy shares in one of those companies, they had to buy from another foreigner at a price typically 7-15 percent above the market price.
 
This created a problem in that the new foreign investor then suffered a 7-15 percent mark-to-market loss on the investment because there was no way of verifying the foreign premium that the investor had paid to buy the stock.
 
The solution to this problem would be for Vietnam to implement a “foreign board” on which transactions between foreign investors were recognised.
 
The country was still classified as a “frontier market” by MSCI and other stock market index companies, and needed an urgent upgrade to the "emerging market (EM)".
 
“The amount of investment funds in the world that is benchmarked against the MSCI-EM index is over 100 times that linked to the MSCI-Frontier index, an upgrade to the MSCI-EM index would probably push Vietnam’s stock market up by at least 50 percent based on the experience of other countries that were upgraded in the past.”
 
The Government should slash corporate income taxes for the next six to 12 months and lower bank deposit rates to encourage local investors to pour money into the stock market.
 
Vietnam’s leading stockbrokers should organise investment conferences abroad to encourage foreign investment inflows.
 
Besides Government bonds, investors also preferred other bonds that were liquid or listed. It should be relatively easy to attract foreign money into Vietnam's nascent corporate bond market if companies took the steps necessary to secure credit ratings from international agencies.
 
“Vietnam’s effective handling of the COVID-19 outbreak to date has been based on quick and decisive action. We view this as an opportunity to apply those same qualities to resolving some longstanding issues which could play a key role in helping Vietnam’s economy grow in the aftermath of the pandemic.”/.
VNA
 
Read original article here
 
Newer News
15/09 Realty, materials boost VN market
14/09 Varying forecasts for stock market, plenty of opportunities for investors
11/09 Shares struggle as large caps vary
09/09 Local ETFs draw foreign attention
07/09 Profit taking to weigh on local market, but September may be bright
07/09 Stock market makes smart recovery in August [Sửa | Xóa]
03/09 New circular helps perfect financial products and stock market: expert
31/08 Beer industry: market slowly recovers
27/08 Selling pressure weighs down market
27/08 Intraday trading, short selling soon available: draft circular
Older News
05/06 Securities fuel shares, investors seek profits in large-caps
04/06 Markets rise on the back of large caps, banks
02/06 Stock market may not enjoy lower lending rate impact: analysts
29/05 Local stocks gain slower, as banks and petrochemical firms keep increasing
14/05 VN stocks slide, but market prospects remain positive
07/05 Large-caps maintain uptrend, markets extend gains in the afternoon
05/05 Markets tumble as global sentiment worsens
29/04 Plummeting stock prices raise fears of businesses being acquired
28/04 VN stocks pulled down by profit-taking
21/04 VN-Index gains for sixth straight session
 
Newsletter Signup
Top Stories
Reference exchange rate down 5 VND on September 15
Construction steel sales projected to recover in year-end months
HVN: Vietnam Airlines increases flights from/to Da Nang
Local ETFs draw foreign attention
Plastics industry shrugs off pandemic, interests stock investors
Market Update
Last updated at 3:10:06 PM
VN-INDEX 900.95 +6.91/+0.77%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.