The decreased market leads to difficulties which foreign investment funds have to face, however, this also is opportune time for new funds to enter the market, the Vietnam Investment Review reported.
Through movements of share prices, losses or profits of investment funds partially can be seen.
In January 2011, VN Index fluctuated around 480 points, but till now, the index plunged nearly 100 points to 385 points. Thus, the average prices of listed stocks have fallen 20 percent against the year early.
Some experts forecast that as the current difficult period is over, a new generation of investment funds may be set up and enter Vietnamese market to catch new opportunities.
According to Dr Le Van Chau – Chair of Vietnam Securities Business Association, FII flow may be broken into three phases: 1991-1996, 1997-2002, and 2003 till now.
In the first phase, although Vietnam did not have stock market, there were seven established investment funds with total raised capital of around $400 million aimed at financial investments in Vietnam. Among them, four were public funds listed in big markets such as UK, Ireland…First funds known in the phase were Vietnam Enterprise Investment Fund, Vietnam Fund, Vietnam Investment Fund, Beta Vietnam Fund, Templeton Vietnam Opportunities Fund…
Prices of fund certificates on the international stock markets were higher than NAV. But, from 1996, they fell sharply and were traded at nearly 45 percent of NAV.
In the second phase when the world economy suffered from heavy effects of the Asian finance-monetary crisis, there was no new fund in Vietnam between 1998 and 2002. Even previous funds raced to withdraw capital or reduce operation size. Five of seven funds in Vietnam withdrew out of the market in this phase while one narrowed 90 percent of its operation scope.
From 2003, foreign investment funds have returned Vietnam along with the development of stock market. Data of a foreign finance institution showed that FII in the period of 2001 to 2006 reached $12 billion.
A lot of big funds were established in this phase, namely Mekong Capital, Vina Capital, IDG Venture Vietnam, PXP Vietnam Fund, DWS Vietnam Fund, Jaccar, KITMC, Golden Brigde, Blackhorse…
But, since 2008, the global economy has undergone ups and downs so the capital flow from foreign funds into Vietnam have been slow down compared with the peak of 2006-2007 period. Few new funds like Vietnam Fund, VAM Vietnam Index Linked…entered the market.
According to market watchdog who reviewed the investment process of foreign funds in Vietnam, the blossom period used to take place after the economy underwent a difficult phase (after 1993 or after 2003).