Exchange tempts US institutions

Many US firms are planning to enter Vietnam’s exchange, described as the fastest growing stock market in Asia

Merrill Lynch was one of the first. The US investment bank was the first international financial institution to begin research coverage of Vietnam in early 2006, demonstrating the firm’s commitment to the country.
After unveiling a report on Vietnam’s investment potential, which surprised the international financial market, Merrill Lynch has decided to enter Vietnam’s financial market, receiving the trading code ML through its custody bank, HSBC, and selecting Bao Viet Securities Company (BVSC) as the broker.
The trading code, which will allow the investment giant to trade Vietnam-listed stocks as a foreign firm, marks an important milestone for its equity franchise in Asia and establishes it as a key participant in one of the world’s fastest emerging economies.
“Vietnam presents one of the few truly untapped markets in the world and has great potential to investors for long-term growth,” said Paul Masi, head of Merrill Lynch Equities in the Asia-Pacific region.
“With the trading code, we would strengthen our presence in Vietnam and better serve our clients by offering them access to this developing growth market,” he added.
Merrill Lynch’s chief Asia-Pacific equity strategist Spencer White, added: “Vietnam is still a very small market compared to most emerging markets, but it also represents enormous potential in the long run, as the economy takes off and more companies go public.”
Merrill Lynch is one of the world’s leading wealth management, capital markets and advisory companies with offices in 36 countries and territories and total client assets of approximately $1.8 trillion.
As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide.
Through Merrill Lynch Investment Managers, the company is one of the world’s largest managers of financial assets. Its assets under management total $589 billion.
Besides Merrill Lynch, a number of other Wall Street institutions, including JP Morgan and Morgan Stanley, have received trading codes through HSBC as part of their investment plan, sources from local securities firms told Vietnam Investment Review last week.
To Hai, director of BVSC’s Ho Chi Minh City branch, said JP Morgan has officially selected his firm as the broker, and already initiated positive steps to move into the Vietnamese market. At the 11th annual conference on securities investment in Asia-Pacific held recently in New York, its affiliate, JP Morgan Chase, a leading global financial services firm with assets of $1.3trn and operations in more than 50 countries, has reserved a plenary session for securities investment in Vietnam for the first time.
Financial analysts said JP Morgan’s reservation for a session on Vietnam in the conference is “a positive signal”, showing the increasing position of the Vietnamese economy in the eyes of American investors.
After the conference, JP Morgan planned to send a research director to Vietnam in October to further survey the Vietnamese securities market as preparation for a similar conference, due to be held in Beijing in April, next year.
Wall Street banks and investors were quoted by Dr. Le Dang Doanh, a speaker at the conference, as saying that they have seen potential arising in Vietnam and were seeking to grab the early mover advantage. Many among them would accompany US President George W. Bush to Vietnam in November for the APEC Summit.
Many foreign investors say the stock market’s attraction can be gauged through the associated black market, where trading volumes are five to seven times that of the official rate. The increasing liquidity in the over-the-counter market has also pushed its growth rate to 50 per cent this year.
The Vietnamese market currently equals 5 per cent of gross domestic product (GDP), compared to an average of 71 per cent for the Philippines, Thailand, and Indonesia, according to a recently released report by HSBC. The local stock market should grow to reach a GDP similar to that in other Asian countries. If Vietnam’s market were a similar proportion of GDP, it would be worth $37bn. In five years’ time, if it grew 8 per cent a year, it would reach $55bn.





No. 782/October 9-15, 2006