Investors still calm despite credit crunch pull down credit growth

March 25, 2008 | 18:10
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The current global credit crunch is impacting on liquidity availability across Asia, but there will be no foreign investors pulling capital from Vietnam, financial experts have said.

Foreign investors are refusing to be panicked
Percy Batliwalla, JP Morgan Chase Asia-Pacific’s managing director and head of Financial Institutions, said Vietnam’s economic growth was positive in the medium and long-term and external factors would only have little and short-run impact on the economy.

“I do not think there will be a pullback from global financial institutional investors given its such positive signals above,” Batliwalla said on the sidelines of Asia Bankers Conference in Hanoi last week.
A senior official from the State Bank said that foreign institutional investors must ask their shareholders to vote for investment decisions so capital withdrawal, if happens, must take time.

“In the current global financial market, which market to invest in is a hard choice,” he said, adding that foreign investors were jumping to buy Vietnamese equity while domestic ones rushed to sell.
Batliwalla added that Vietnam should keep its current fast economic growth pace, but also raise the efficiency rate to restore foreign investors’ confidence.

“Vietnam is still among JP Morgan’s top three most lucrative investment destinations in Asia,” added Craig Weeks, JP Morgan Asia-Pacific’s managing director and global head of Trade Finance and Logistics Management.
Batliwalla, however, said the global credit turmoil from the current problematic US economic situation would affect Vietnam’s capital market and local financial institutional investors would find it hard to stay abreast of developments.

“Vietnam’s capital market correction is now inevitable and all types of assets valuations will be continuously eroded, but financial crisis is more unlikely happening in Vietnam,” said Batliwalla.
In related development, the World Bank in its Global Economic Prospects 2008 said in January that East Asia, which attracted more than $170 billion in gross capital flows in 2007, faces the risk of a pullback in such investments. It said stock markets in China, Indonesia, Malaysia and Vietnam are among those under scrutiny.
Asia has been largely shielded from the turbulence in global financial markets as its lenders have limited exposure to the subprime crisis.

Besides financial market turbulence, other risks for East Asian economies in the coming year include the possibility of a “full-fledged” US recession and higher oil prices, according to the World Bank report.

By Manh Hung

vir.com.vn

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