Fund in the red but still upbeat on share punts

Friday, May 9, 2008
VietNam Asset Management Ltd (VAM) recently announced losses in the first quarter of 2008 but they confirmed to continue investing in Vietnamese stock market.

Deep correction of the stock market pushed many share prices back to the real value, even lower. This is also the good opportunity for investors, including VAM, assessed the fund's general director Nguyen Xuan Minh.

Which factors of Vietnamese stock market attract foreign capital?

Foreign investors as pouring money into any country always focus on political and social factors, economic growth prospects as well as investment policies and rules. Viet Nam has a stably political and social background as compared with other emerging counties such as Thailand, Philippines, or Indonesia. Viet Nam's open door policies and rapid economic growth in many years are advantages to attract foreign investment capital. The shape and development of Vietnamese stock market is also similar to that of emerging markets of China, Russia, India, Thailand and Latin America. As the market remains young, small and inexperienced investors usually trade shares in line with the psychology of the crowd mentality and in short-term rather than securities investment with a careful consideration and analysis. This caused sudden changes and instability of the stock market. Many share prices are now adjusted down to their real value. In my opinion, the stock market slump is not totally the cause of the reduction in foreign capital inflow into Viet Nam. The proof is that global well-known large sized groups managing hundreds of billions of dollar, like Franklin Templeton, Dubai Investment Group started to pay more attention to Viet Nam with the faith in a healthy and equal stock market.

Which funds is VAM managing? How about favourite investment sectors of VAM?

VAM is managing three investment funds including Viet Nam Emerging Market Fund, VAM Vietnam Strategic Fund with the participation of two strategic shareholders of Dubai Investment Group and UOB KayHian, and a public fund in Malaysia. We can invest US$3-15 million in a company through strategic investment by buying additionally issued shares or convertible bonds based on that company's operation, administration ability and financial strength with a clear development strategy and independence with its parent company. VAM now is focus on key sectors such as petroleum, energy, real estate, infrastructure, natural minerals, telecommunication, consumer goods, agriculture and finance.

From Viet Nam recognised to be "the best grower in Asia" last year, it is proposed that there should not to invest in the stock market because domestic investors and foreign funds as well received huge losses due to the strong slide of VN Index during the recent time. How does VAM suffer affects from this?

During the last one-year, the VN Index dropped by 50%. Most investment funds that invested in listed shares received big losses. Even some lost over 40% of their initial capital. Particularly funds of VAM, their investment results remained good as compared with the slump of VN Index and other funds. Because, when the stock market was overheating with a sharp rise in listed shares, we decided to adjust our investment portfolio to shift to unlisted companies with cheap shares. After a period, these unlisted companies reported a good performance so our funds were not affected much due to the drop in the stock market. In particular, our one fund only lost 6% against the fall of 50% of the stock market and another earned a profit of over 20% during the last one-year.

What is VAM's assessment on the correction period of Vietnamese stock market recently as well as growth prospects in the future?

The recent correction of Vietnamese stock market is essential correction that any global market must face after a too overheating development period. On the other hand, US economic depression and global inflation situation also have affected strongly to most finance markets and Vietnam is not an exception. However, above factors are temporary only. VAM still is very optimistic about the strong growth of Vietnamese stock market in the future and believes that Vietnam's securities investment environment will be clearer and participants will have a better corporate administration culture.

Can your please reveal what VAM's investment commitments in Viet Nam are?

We will continue investing in Viet Nam market and currently promoting the capital mobilisation in foreign countries. Especially, we are prep rating to raise capital from Asia, Europe and Middle East for a new fund that will be listed on an Asian stock market. Moreover, VAM is cooperating with two Japanese finance companies to set up a Vietnamese fund with an aim to help Japanese investors enter the Vietnamese stock market more easily and effective. (TBKTVN)