Foreign eyes are yet to be turned

Statistics from the Ho Chi Minh Stock Exchange (HoSE), Vietnam’s main bourse, showed that foreign investors net bought around 155 million Vietnamese shares worth VND10.4 trillion ($514 million) in the year to date, the longest net buying period so far. 

In the first fortnight of October, foreign investors net cashed 19 million shares worth VND800 billion ($41 million) of domestic stocks, compared to 25 million and VND1.1 trillion ($56.4 million) in September and 15 million and VND800 billion ($41 million) in August, according to HoSE statistics.

Nguyen Son, head of State Securities Commission’s Market Development Department, said he had worked with HSBC and Citi, realising that there would be small chunks of foreign portfolio investment (FPI) money into Vietnam.

“Foreign investors were recently net buyers of Vietnamese stocks, but compared to the whole market trading activities, it is just on a small scale,” said Son.

Son did not reveal the exact figure of FPI cashed, but StoxPlus financial media company’s chief executive officer Nguyen Quang Thuan said there were only net inflows of around $500 million from a Japanese fund in the year to date.

“Vietnam’s stock market moved in a tight range for several months this year. Therefore, most FPI sources were engaged in private equity deals, not listed stocks,” said Vo Tri Thanh, deputy director of the Ministry of Planning and Investment’s Central Institute for Economic Management (CIEM).

Dao Phuc Tuong, Singapore-based APS Asset Management PTe Ltd’s investment manager, said he had organised Vietnam trips for several cash-rich foreign institutional investors to secure investment opportunities. However, they kept a cautious view of the Vietnamese market.

“Some investors said nothing after visits while one institutional investor said it will come back in three years,” said Tuong.

Foreign exchange concerns weighed heavily on potential investors, said Tuong. Vietnam has weakened the dong twice with nearly 10 per cent adjustments in the last 12 months.

Market analysts said that thanks to strong fundamentals, emerging markets were attractive to foreign investors. Recent research by International Institute of Finance  estimated the flows to emerging markets hit $186 billion in 2010, three times higher than the 2005-2009 period.

Overseas investors pumped most cash into emerging-market equities since late 2007 with net inflows of over $6 billion in the week ended October 6 and Asia bond funds attracted more capital on further signs growth in developed nations is slowing, according to fund tracker EPFR Global.