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Foreign investors keep “cautiously optimistic”   2012-04-02 - Lao dong

More foreign capital has been poured into the stock market recently, which, in the eyes of analysts, could be seen as the sign showing foreign investors’ optimism about Vietnamese stocks.


The Saigon Securities Incorporated (SSI) believes that the total foreign capital poured into the stock market has reached 19 trillion dong so far this year. Pham Ngoc Bich, a senior executive of SSI, said that the figure released by SSI is even higher than the figure found in the HSBC’s report “Vietnam At a Glance” released earlier last week. In the report, the British bank estimated that the total cash flow to the stock market had reached 500 million dollars by March 12.

A dollar is equal to 21,000 dong.

Bich said that foreign investors have shown bigger interests in the Vietnamese stock market. “Some clients, who opened transaction accounts many years ago, now consider injecting money in. Some investors, who were absent for a long time, have also returned to Vietnam. A lot of clients, who opened accounts 5-6 months ago, have also remitted money into the accounts,” Bich said.

However, some analysts still keep doubts about the recent moves by foreign investors, thinking this might be a trick played by the investors before leaving the market. On March 16, domestic investors were once shocked by the massive sale of blue chips. Meanwhile, opinions from the well informed circle said that foreign investment funds sold the shares to restructure their portfolios.

The information that a series of foreign investment funds which have the investment capital of up to tens of thousands of billions dong would be closed in 2012 as planned has overshadowed the market in the last many months. People fear that once the huge sum of capital is withdrawn from Vietnam, the stock market would collapse.

In 2011, some sources estimated that 25 trillion dong would be withdrawn from Vietnam. However, Andy Ho, Managing Director of VinaCapital, said that there is no reason to think this would come true.

He went on to say that once making investment in Vietnam, foreign investment funds understand that they have to accept risks. Some funds would close, but others would stay in Vietnam, while more funds would be established.

He believe that the foreigners’ net sale would continue in the time to come, since the current stock prices remain attractive, while investors can see positive sings of the national economy, including the controlled inflation and the stabilized exchange rate.

Juerg Vontobel, Chair of the Swiss Vietnam Holding Asset Management (VNH), has also noted that the improvements in the macroeconomic conditions in Vietnam are big enough for investors to invest in Vietnamese stocks.

“We do not think that the 2011’s bad inflation scenario would repeat this year,” he said, adding that economists believe the Vietnam’s economy would be better in the second half of 2012. The VNH certificate price on the London Stock Exchange increased by 39 percent in the period from late 2011 to March 15, 2012.

However, analysts have commented that foreign investors still keep “cautiously optimistic”. The investors still can see existing high risks and they still need to keep a close watch over the macroeconomic performance.

Mr Vontobel said he hopes the State Bank of Vietnam would continue curbing the money supply until it can be sure that the control is within reach. Besides, foreign investors hope that Vietnam would pursue the reform of the banking system and real estate sector with patience.

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