Optimism urged for 2023 capital market prospects

Could you share an overview of merger and acquisition (M&A) activities in Vietnam, particularly for listed equities in Vietnam so far this year?

Well, given the global uncertainties, there hasn’t been very much of such activities this year. But partly that’s because everybody has been in difficulties everywhere in the world, including Vietnam.

But I suspect that this is only a short-term factor. I believe the M&A market, for listed or non-listed companies, will pick up over time.

Dominic Scriven, chairman of Dragon Capital

Environmental, social, and governance (ESG) considerations are playing an increasing role on investors’ agenda. How do they implement such criteria into their strategic plans in Vietnam?

ESG is really a complex term and it is a very broad subject. What it really means is people paying attention to aspects that are not just financial, but relate to other responsibilities. At Dragon Capital, governance is a huge issue. There have been some problems in Vietnamese companies this year, and one of the reasons is because people have not yet concentrated enough on governance.

To make good corporate governance, you must pay attention to things like how you make decisions, how you measure risk, how you plan these things. Besides that, environmental issues should play a crucial part in our decisions, from climate change to pollution and biodiversity. All of these are important.

To raise better awareness in these matters, we should have more opportunities to learn through discussions, meetings, and sharing experience and knowledge.

Given the stringent fundraising conditions and various challenges of Vietnam’s corporate bond market, how could domestic businesses tap into the foreign funds?

In the previous 10 years, Vietnam’s capital market has expanded at a rate that may have outstripped all expectations. And now, some unexpected pressures have arisen recently.

In any case, we must keep in mind that the capital markets are here to stay and will continue to expand. It is their responsibility to provide capital, and Vietnamese businesses need medium- and long-term capital for their development.

They may get a portion of this from banks, but the majority must come from the capital markets. Therefore, we should be optimistic about the future of financial markets. What we should do right now is to learn from our experiences this year and create markets where investors are better educated, and where there are regulations that are easy to understand and enforce.

Other types of stakeholders should be treated well, from professional investors, securities companies, and investment institutions to pension funds and life insurance, among others.

In 2021, individual investors accounted for 93 per cent of stock market participants. That could be great for individual investors, but it is not good for the markets. In most developed economies, professional investors would be more than 50 per cent. How can we tackle that? It’s not easy, but we have to build these things for the future, starting from educating the market.

How do you assess the future of Vietnam’s position in the context of global economy and Southeast Asian region?

For the last 30 years, we’ve had a lot of really positive things take place around the world economically, from currency moderation to the productive disinflationary effect of China entering the World Trade Organization and the global economy. We’ve had an incredibly positive three decades on the whole, and I’m afraid to say I don’t think the next 30 years will be as positive. But I think we’ve got that great Vietnamese saying: “Wherever there is danger, there lurks opportunity”.

I think for Vietnamese companies, there has been a breakout and reorganisation of global supply chains, new technologies, new currencies, new trading mechanisms, and digitalisation. All of these things continue to offer compelling opportunities for Vietnam.

There has been the rise of East Asia, and now there is the emergence of Southeast Asia more specifically. We’ve talked for many years about ASEAN, which has generally worked quietly. But now I think Southeast Asia is being acknowledged as a real locomotive of opportunity.

Implications of digital assets in M&A Digital assets have gained a lot of attention over retail investors, institutional investors, companies and policymakers in recent years. Despite the dramatic decline of the market, the potential growth for digital assets over the upcoming decade is expected to be high and reach tenths of trillions of US dollars market capitalisation according to prominent money managers like Fidelity and Ark Invest.

Masan moves demonstrate room for cross-sector growth Masan Group’s activities over the past year or so have shed a spotlight on Vietnam’s merger and acquisition market thanks to the group’s dealmaking efforts to transform business models.

M&A Vietnam Forum 2022: 'Igniting new opportunities' The 14th Vietnam M&A Forum 2022 organised by Vietnam Investment Review under the auspices of the Ministry of Planning and Investment took place in Ho Chi Minh City on November 23.

Domestic corporations turn to global credit financing sources Given current challenging fundraising and bleak merger and acquisition circumstances, a number of Vietnamese groups are looking to financing sources from overseas credit facilities to strengthen their resilience in the face of market fluctuations.

Experts look to 2023 for top M&A deals Although the merger and acquisition market in Vietnam has been slow going in 2022, opportunities next year should be abundant even despite concerns from prolonged global economic storms, according to various insiders.