Bush visit ignites bourse

US President Bush made all the right noises when he visited Vietnam’s fledgling stock market

Local and foreign investors rushed frenetically to buy stocks after the visit, pushing the VN-Index, the official benchmark measuring the movements of the local bourse, to 665.53 points last Friday, the highest point since its inception on July 20, 2000.
Stronger participation of foreign investors contributed to the growth, helping boost demand from domestic investors as well.
Foreign investor portfolios covered most blue chips on the board, including Gemadept, Kinh Do, REE, Sacom, Vinamilk and Sudico.
The VN-Index close was up 116.4 per cent so far this year, making it the world’s top performing benchmark index in 2006.
Brokers said the index could soon hit the 700-point mark soon.
One of the most significant factors contributing to the higher performance, according to financial analysts, was the visit by President Bush, which is considered as a catalyst for the Vietnamese stock market and the sign that American investors are targeting Vietnam.
“This will be an opportunity for marketing and for calling for more capital for listed firms and those that are about to list their shares on the bourse,” said Dang Thanh Tam, CEO of the newly-listed Itaco, which also sat in on a dialogue with the president last week.
Tam expected that the Vietnamese stock market would develop strongly after the historic visit.
While the recent gains in the VN-Index reflect the fact that more investors are already participating in the market, a number of other indicators have also drawn attention in the direction of Vietnam’s increasing popularity in the international arena.
“It’s an excellent time for anyone to invest in Vietnam,” said Horst Geicke, chairman of VinaCapital, which manages three investment funds worth $800 million in Vietnam. He cited the country’s admission to the WTO member as one of the driving forces for increased investment.
Like Geicke, many other investors contacted by Vietnam Investment Review believe that Vietnam’s recent popularity and the spotlight the country has enjoyed were well deserved.
They say the country’s fast and steady economic growth, which carries one of the fastest GDP growth rates in the world, coupled with a clear agenda laid out by its reform-minded leadership to join the global economic development process, all added strength to credit rating agencies’ upgrading Vietnam’s country rating and its outlook.
Established six years ago, Vietnam’s stock market is rated as the fastest growing exchange in Asia so far this year, but its capitalisation is now only about $4 billion with 56 listed companies. Hanoi has an over-the-counter stock market.
The size of the exchange is expected to increase significantly with around 30 companies licensed recently by the State Securities Commission and another 20 expected by the year’s end.
A number of high-profile international financial firms, including Merrill Lynch, JP Morgan, Morgan Stanley, UBS, Woori Investment and Securities, and Tong Yang Investment Bank from Korea, have already gotten codes to trade stocks on Vietnam’s emerging stock market.
There has also been an influx of enquires and referrals from potential investors, including global custodians, emerging market funds, newly established funds, fund management companies, and private investors. These interested parties are refreshing their market guide, updating their information database, preparing for due diligence visits, and in some cases applying for foreign investors’ securities trading codes.



No. 789/November 27- December 3, 2006