The right time to buy into Vietnam

Listed firms have reported good business results and the national economy was developing smoothly,he said.
“And, when correction hits about 30 per cent which Vietnam has experienced, it is often a good time to buy in,” Ryu said.
“One of our open funds is absorbing $20-30 million per month,” he said, adding that South Korean financial investors were interested in Vietnam. He added that investment from South Korea would rise sharply in the coming months.

Although KIS has been investing in Vietnam for nearly a decade, the opening of KIS representative office in Ho Chi Minh City last week marked an official move to the country, he said.
KIS, through its subsidiary KITMC already rooted in Ho Chi Minh City, is now managing three funds. One invests in listed firms ($700 million), the other real estate ($200 million) and the local mineral sector ($220 million).

“Out of $700 million targeted for listed firms in Vietnam, 60 per cent has been disbursed, mostly in food, beverage and construction areas. The remaining 40 per cent will be spent in the forthcoming initial public offerings (IPOs) of large state-owned enterprises slated for the end of this year,” Ryu said.

KIS’ investment in local stocks accounts for roughly 50 per cent of all of Koreans’ $1.2 billion spending.
If the IPOs were not met, KIS would seek high-quality goods on listed firms, not excluding good items in the OTC market, he said. “We also pay great attention to the consumer market, telecommunication, banking and finance, and securities firms,” he said.

“We are looking for a local securities firm to form a securities joint-venture with an aim to become a top player in Vietnam,” a senior KIS official said.
However, Ryu talked down market development, citing few qualified goods, limited liquidity, inadequate transaction systems and conditions that limit “room” for foreign shareholders.
“The limited “room” for foreigners was among main reasons that we were unable to spend the remaining 40 per cent of our total money,” Ryu said. He added that if foreign investors’ ownership ratio in local companies were increased, not only KIS, but also many other entities would pour money into Vietnam. Ryu believes that if Vietnam could maintain the economic growth rate and the financial sector keeps pace with the national economy, the stock market would continue to develop fast with strong investment levels.

“Vietnam’s stock market is equal to what South Korea’s was in the mid 1980s when market capitalisation reached 20 per cent of GDP. That figure then jumped to 50 per cent after only two years. With this pace of development, it is feasible for Vietnam to make its market capitalisation equivalent to 50 per cent of GDP by 2010 because the figure now stands at 26 per cent,” he said.