Vietnam to remain an investor magnet in 2018

Maybank Kim Eng is upbeat about Vietnam's appeal as a fast-growing market

In its 2018 strategy report, Maybank Kim Eng Securities (MBKE) pointed out that the equitisation process of state-owned enterprises (SOEs) in Vietnam is picking up. First, SOEs are now required to list within one year of the first public sale. About 15 SOEs are gearing up to trade on the stock exchanges this year—a move that MBKE believes will add at least $9 billion to Vietnam’s market capitalisation.

Some notable IPOs include PV Oil, Vietnam’s second largest oil retailer and sole exporter of crude oil; PV Power, the second biggest electricity retailer; Binh Son Refinery, the operator of Vietnam’s first oil refinery; and Vinachem, a national chemical group.

Beside these high-profile IPOs, Vietnam will also welcome further state divestments. According to the approved plan, the government will withdraw from at least 150 SOEs from now until 2020—with 2018 being the busiest year.

Recent successful stories, such as Vinamilk and Sabeco, mean that the government is on a good path to attract buyers for its divestments this year. “IPOs and share sales will provide more high-quality products for the Vietnamese financial market, luring in foreign capital and improve the business efficiency of SOEs,” wrote MBKE.

The second important factor, according to the brokerage house, is Vietnam’s on-going quest towards becoming an “emerging market.” According to MBKE, investors will remain positively enamoured if Vietnam continues to open its market to foreigners, ensuring equal access to all investors and enhancing corporate governance standards.

“Improvements in both quantitative and qualitative factors will bring Vietnam extra points in investors’ eyes,” said the report.

Other factors include the prospective business results of listed firms, especially those in the banking, real estate, and consumer goods sectors. Oil and gas businesses are also up for a good year if global oil prices continue their recovery.

The MBKE report also noted that stable macroeconomics will provide strong support for the stock market. The brokerage expects Vietnam’s GDP to grow by at least 6.5 per cent, monetary policies to remain accommodating to growth, and foreign investment figures to stay high in 2018.

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