Korean investors flock to Vietnamese potential

At the recent Vietnam–Korea investment conference in Ho Chi Minh City, chairman of the Korea Financial Investment Association Hwang Young Key noted that Koreans were drawn to Vietnam by strong growth prospects. Investors from Korea were also impressed with Vietnam’s strong determination to integrate into the global market, which is shown through the flurry of recent trade pacts, including the Vietnam–Korea Free Trade Agreement that took effect last December.

“Moreover, Vietnam is pushing the equitisation process of state-owned enterprises, as well as lifting the foreign ownership limit on listed domestic firms. All of this is good news to Korean investors, who are truly keen to invest in Vietnam, both directly and indirectly,” said Hwang. He pointed out that the Vietnam – Korea investment conference has drawn the attendance of numerous leaders from leading Korean funds, brokerages, and other financial institutions, who altogether oversee $350 billion.

The most recent display of Korean investors’ eagerness was conglomerate CheilJedang’s aggressive bid to become strategic investor to Vissan, a leading state-owned meat processor. At the Vietnamese firm’s initial public offering two weeks ago, CheilJedang offered the highest price of VND102,000 ($4.5) per share, almost ten times the starting bid.

Meanwhile, chairman of State Securities Commission (SSC) Vu Bang said that Koreans were among the three biggest overseas investors on the Vietnamese financial and securities market. To serve the on-going influx of Korean investment, four Korean brokerage firms have already set up business in Vietnam at the end of 2015.

Bang noted that Korean investors’ interest in the Vietnamese stock market goes hand-in-hand with the country’s top position in foreign direct investment in Vietnam, which reached $44.1 billion in 2015. The annual turnover for bilateral trade has also skyrocketed since 2009, to stand at $36.5 billion last year.

Chairman of the Ho Chi Minh Stock Exchange Tran Dac Sinh added that Vietnam was currently home to 34 firms, branches, and representative offices of Korean financial institutions. These entities offer a wide variety of services and products to Korean investors, adding greater value to the Vietnamese market.

To attract investors from Korea and the rest of the world, the Ho Chi Minh Stock Exchange (HOSE), in collaboration with Morgan-Stanley Capital International, has introduced the Global Industry Classification Standard in January. The classification of industries is expected to spur the number of exchange-traded funds in Vietnam and lure financial investors from overseas. Moreover, HOSE will diversify its products by introducing covered warrants or non-voting depository receipts. The anticipated derivatives market and pension funds will come into reality in 2017, offering a wider range of choices for investors from Korea and elsewhere.

In 2015, the number of foreign institutional and retail investors at HOSE has increased by 19 (or 4.3 per cent). In total, approximately 2,620 institutions and 15,200 overseas individuals have registered to trade at the stock exchange.