Local markets enjoy renaissance

More than 90 foreign investors mainly from Europe and East Asia last week flocked to Ho Chi Minh City during VinaCapital Group’s annual foreign investors’ conference to learn more about the investment opportunities across Vietnam’s emerging economy. The number was doubled compared to last year.

VinaCapital CEO Don Lam said: “This is an important indicator of the renewed interest in the Vietnamese markets among overseas investors. We are confident this interest will result in tangible investments in the coming years and beyond.”

Lam added that “overseas institutional investors are always looking for good long-term buys and the low valuations of Vietnam’s bluechip companies in 2010 make this an excellent chance for equities investment in the long run.”

According to Marc Djandji, director of research at VietCapital Securities, in the first nine months of 2010, the number of foreign institutional accounts grew by 20 per cent on-year compared to 2009’s 6 per cent.

“This is a very positive sign about the perception of Vietnam’s long-term prospects as institutional investors typically have a long-term view of the markets they decide to enter,” said Djandji, adding that whenever foreign direct investment (FDI) and foreign remittances into Vietnam could offset the country’s trade deficit, it would be good time for foreign investors to take action.

The country has seen a corporate earning growth averaging 10-15 per cent, however, the local stock markets have performed poorly, given concerns over the trade balance and the depreciation of the currency, among other issues.

The country’s stock market is among the very few markets in Asia seeing a constant downturn recently. “Hot capital flows are not likely to make their way to Vietnam. VinaCapital has seen about $2 billion to $3 billion worth of the capital recently pumped to the Asia-Pacific region,” said Lam.

He added that listed investment funds in Vietnam had been traded 40 per cent lower than their real values while those listed on overseas securities markets saw only 25 per cent lost.

Founded in 2003 from a single $10 million fund, VinaCapital Group now has $1.8 billion in assets under management. It has already invested $1.5 billion into listed and private equities, real estate, infrastructure and information technology sectors.

VinaCapital plans to invest $300 million in the next three years, mainly into equities and real estate sectors.

“We will prioritise to invest in companies operating in the areas of consumer goods, healthcare, banking, oil & gas services, seafood, construction material and real estate,” said Lam.