Foreigners snap up cheap stocks

Foreign investors have been encouraged by recent SSC policy changes

In October, foreign investors bought close to 500,000 shares worth $746,000 according to the Ho Chi Minh City Securities Trading Centre. The buy up accounted for 7 per cent of total market volume.
Gemadept topped the list with 213,370 of its shares scooped up by foreign investors. Chau Thoi Concrete Company No.620 followed with nearly 178,690 shares, Agifish with 63,700 and Savimex with 14,250 shares.
More than 40 foreign investors have been given trading codes, most of them individual investors, according to HSTC.
“Foreign investors are now more active in trading. They are closely monitoring prices and seeking investment opportunities. This is a significant and encouraging sign for the bourse, which is now in dire shortage of purchasing power,” an analyst from Saigon Securities Inc (SSI) said.
Analysts attributed the recent participation of foreign investors to the sound market management policies of the State Securities Commission (SSC). These included a move to allow foreign investors to directly open trading accounts at local securities companies instead of with foreign custodial banks as previously.
However, low share prices were cited as the principal trigger.
“Previously, foreign investors were taking a ‘wait-and-see’ approach to Vietnam’s stock market. But now, with many shares on the market possibly undervalued, they are seeing opportunities,” an analyst said.
Foreign investors during October were mostly individuals with a few financial institutions like Dragon Capital joining in.
“A number of Japanese companies have contacted us in recent days, asking us to sell our shares to them on a negotiated basis,” Nguyen Hung, general director of Chau Thoi Concrete Company No.620 (CCC 620), told Vietnam Investment Review last week.
He said they were seeking opportunities to participate in the construction of the Can Tho bridge in the Mekong Delta. CCC 620 is expected to be one of the developers.
“They want to lobby for the project by buying our shares,” he said.
Gemadept has found favour with foreign investors following plans to list in Hong Kong and Singapore to help raise funds for a number of multi-million-dollar projects.

Last week, the company announced it was seeking permission from the Ministry of Planning and Investment to establish two affiliates in Malaysia and Singapore, with a combined investment of $600,000. It disclosed no further details.

The still-nascent market is set to see more foreign investors enter the fray, with the authorities assisting their participation, the analysts said.

The State Bank has, for instance issued a circular to assist foreign investors repatriate stock dividends, ironing out a long-standing uncertainty.

The Government has recently raised the cap on foreign ownership of a listed company to 30 per cent from 20.