Foreign investors confident in Vietnamese stock market outlook

15-Mar-2018 Intellasia | The Hanoitimes | 6:00 AM Print This Post

Countries like Vietnam and Pakistan are coming off a low base in terms of economic development, so there is the potential for a catch-up effect, like what happened in places like Russia and Brazil over the past two to three decades, Jon Scheiber, CEO of Tundra Fonder AB, said.

Tundra Sustainable Frontier Fund, run by the Swedish manager that oversees $400 million in assets, has returned 6.8 percent this year to beat 97 percent of its peers, according to Bloomberg. Egyptian, Vietnamese, and Pakistani equities make up almost 60 percent of its holdings, the figures show.

Tundra Fonder, which has research offices in Karachi and HCM City, uses its local presence to look beyond the biggest stocks. The top five equities in particular markets can still “be good value but they are well-researched and well-known.”

Scheiber told Bloomberg that Vietnam has become “a bit pricey but that is tilted to the blue chips.” Beyond the half dozen top-valued companies, other smaller ones also look attractive.

Earlier, Rong Viet Securities Corporation also said in a report that the VN Index will increase by at least 17 percent this year (even 67 percent under the best case scenario), meaning it could end the year somewhere between 1,170 and 1,640.

Nguyen The Minh, a senior analyst at Saigon Securities Incorporation, was more reserved.

“The VN Index could reach 1,050 points in the short term, and 1,300 by the end of the year,” he said.

Foreigners have been net buyers of the country’s shares this month, even as they pulled a combined $14 billion from nine Asian markets tracked by Bloomberg.

According to the National Financial Supervisory Committee, foreign investors made a net purchase of $573 million in Vietnamese stock markets in the first two months of the year.

The committee projected that the outlook for foreign indirect investment (FII) inflows to Vietnam this year is generally positive, which will partly support the foreign exchange rate.

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 capitalise on the growth of the stock market, avoiding to crowd the market in 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 last year.

Stakes in 245 state companies are up for grabs in 2018, including four scheduled in the first quarterBinh 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 planned for 2017-2020.

Bloomberg called Vietnam a “frontier market” in Asia last year, as it was the biggest gainer in percentage terms with a 47 percent gain on the VN Index. Market capitalisation almost doubled to nearly $150 billion, fueled by state-owned company sales and listings, it said.

The Vietnamese economy grew by 6.8 percent in 2017, breaking its own 6.7 percent target which both government officials and economists had considered ambitious.

The country remains one of the fastest growing economies in the world and has set the goal of expanding by another 6.7 percent this year.


Category: Stocks, Vietnam

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