Foreign capital stays in Vietnam for seeking other business opportunities

The move by foreign investors to sell stocks in big quantities should be seen simply as a “technical transaction”, while it does not mean that the foreign investment funds are trying to withdraw form Vietnam.

Two South Korean funds stay with Vietnam

The sale in masses by foreign investors once made domestic investors think that foreign investors are trying to run away from Vietnam. Especially, they whispered in each other ears the names of the two South Korean investment funds, which they believed were under a hard pressure – Korea Investment Trust Management KITM and TongYang.

Entering Vietnam in the second investment wave, the two investment funds continuously made disbursement in 2006 and 2007. Meanwhile, 2012 is the time for the funds to liquidate the portfolio. In its peak period, the total assets of the two funds exceeded one billion dollars.

However, in the latest news, the board of management of KITM has reached an agreement with shareholders on turning the fund into an open fund.

Several months ago, at a meeting in South Korea, the representatives of KITM tried to persuade shareholders that dissolving the fund would be a bad choice, saying that Vietnamese share prices are now at the lowest levels in history due to some short term uncertainties.

As such, all the six investment funds managed by KITM will stay in Vietnam with the total assets of 400 million dollars.

Meanwhile, sources from Tong Yang said that like KITM, the process of shirting to operate as an open fund is nearly completing.

A question has been raised that–why do foreign funds keep selling stocks at this moment, when the stock prices continue falling down?

Juerg Vontobel, Investment Director of Vietnam Holding said that this is just a technical transaction of institutional investors. When anticipating that the prices would go down, funds tend to sell stocks.

Dau tu has quoted a foreign fund director as saying that in the time to come, the investment funds with the operation duration of five years would have to consult with shareholders about whether to maintain their operation in Vietnam. If the stock prices would be still low, the pressure to close the funds would be very hard.

However, this will be the story of the future. At this moment, investment funds do not sell stocks to quit Vietnam.

Still keeping optimistic

The pessimistic has been pervading to every corner of the stock market. However, mini surveys conducted by local newspapers show that some foreign institutional investors still keep optimistic.

At present, the Vietnamese stock market is at a T-junction, while a lot of negative factors have led to the sharp fall of 32 percent of the VN Index from its highest peak in 2007. However, foreign investors believe that the national economy, which is being stricken by the high inflation, would recover strongly in the next years, if it is backed by the dong stability.

A London based investment fund, in a letter to its shareholders, wrote that though there are many risks in making investment in Vietnam, but the managers of the fund, once again, can be sure about the great investment potentials in Vietnam.

Foreign institutional investors can see with their eyes how Vietnam applied the policy on tightening the monetary policies, which is really a “bitter medicine,” but really necessary. Once the inflation rate decreases, investors would feel encouraged, commented Juerg Vontobel.

Foreign investment capital keeps flowing to Vietnam, quietly. BankInvest, for example, has successfully raised 100 million dollars in fund which it will disburse for unlisted private businesses.

It is expected that by early 2012, foreign investors would buy the stakes of two domestic pharmacy companies, while the value of the affairs may reach hundreds of millions of dollars.

Source: TBKTVN

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial