Market exit door is hard to find

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A foreign investment fund, which focuses on small listed companies, in February had exited just four out of 10 investments. With the remaining investments generally illiquid, the foreign fund is struggling to divest its portfolio.

One among the fund’s six remaining investment, is a listed stock with as low as 6,000 shares traded per session during this month, compared with 23 million units outstanding.

In other cases, some investment institutions which purchased stakes in unlisted companies are even meeting with bigger difficulties, as those companies are almost unable to list given tough market conditions and unable to increase the shares’ liquidity.

“In this time, the damage of investing largely outside core business becomes sour than ever,” said the director of a construction firm which is having money stuck in some companies its invested.

An investment director for a financial firm indicated that his firm was finding it hard to liquidate some investments and lacked cash for next investments.

“While we can hardly find an institution investor to sell at once the investment, registering to sell partially via the exchange will pushing down both the shares’ price and liquidity,” said the director.

“Divesting investments is the general problem of the majority of funds given ongoing illiquid market,” said Phan Minh Tuan, general director for Dragon Capital. “Although we remain trying to find foreign partners for opening new funds, the market conditions are clearly unfavorable. They [the foreigners] are concern about the ability of exiting in the future.”

According to Le Chi Phuc, investment director for Saigon Investment Capital, Vietnam-based funds were mainly holding listed blue-chip stocks and over-the-counter shares. “The ability of exiting those investments much depends on the local economy and stock market prospects until 2013.”

Even big individual investors are in the same situation with those institutions. “Buying power is weak now,” said a Hanoi-based investor “Even if I were the only one seller in the market now, I would still need 30 sessions to sell all my investments.”