Vietnam’s stock market attractive in medium and long term

17:01' 11/04/2008 (GMT+7)

VietNamNet Bridge – In the last three consecutive trading sessions, while domestic investors fled, foreign investors pushed up stock purchases, and they now are the main participants in the market at this moment.



In the said three trading sessions, the total sum of money foreign investors injected in the market reached VND769.3bil, while they only sold VND180.2bil worth of shares.



As such, the net purchase value in the last four trading sessions was reportedly at VND591.4bil, the record level since October 2007.



While the big purchases of foreign investors at the moment of the market’s falling surprised many people, Dominic Scriven, General Director of Dragon Capital Investment fund management company, said that it was not a surprise to him at all.



He said that the market has fallen to a level low enough to stimulate purchases.



Mr Scriven, as other foreign investors, is optimistic about Vietnam’s stock market.



According to Dragon Capital, 100 listed companies had the growth rate of 70.7% in profit in 2007 (the figure would be 40% if excluding the profit from finance investments and real estate). The profit of the companies is expected to see the growth rate of 29.3% in 2008.



Dragon Capital estimates that by 2010, the market capitalisation value will be $100bil and the market will see 500 listed companies.



Dragon Capital did not get an operation licence for the first three years of its presence here. It suffered losses the next three years, and only made profit beginning in the 7th year. Therefore, investors should keep a medium- and long-term vision, he said.



When asked if there is a risk of foreign capital leaving the country, Mr Scriven said that he cannot see signs that suggest capital will flow out of Vietnam.



The capital that flows into Vietnam, luckily, is not short-term capital which serves speculation, and there is no sign that shows that foreign investors are trying to withdraw capital from Vietnam.



Vice versa, foreign capital keeps inflowing into Vietnam. It is because of the attractiveness of Vietnam’s financial market. The Libor interest rate is now 3%, while the government of Vietnam offers 8% for its bonds. As such, foreign investors can reap 5.3% profit from the gap between the interest rates. In fact, they have to face risks with exchange rate fluctuations, but the risks are not high in Vietnam.

Listing shares: big cheeses may miss appointments?

16:58' 11/04/2008 (GMT+7)

VietNamNet Bridge – Leaders of big corporations and groups still confirm their determination to list on the bourse as initially scheduled. However, in many cases, the implementation of the listing plans still depend on many other factors as well.
Investors all know by heart the equitisation and listing plan of Vietcombank, which was made public several months ago, when the bank made IPO. The bank planned to organise the first shareholders’ meeting in April, and list on the HCM City Stock Exchange in June 2009.
Even when people thought that the listing plan might be delayed as the bank could not find foreign strategic partners, Vietcombank’s Chairman Nguyen Hoa Binh tried to calm the public down with the promise in February 2008 that if Vietcombank’s shareholders’ structure couldn’t meet the current regulations to be eligible to list on the bourse, Vietcombank would ask for the Prime Minister’s approval to list as an exception.
There has been no news for the last two months since Binh made the statement, and investors have every reason to doubt whether the announced plan of Vietcombank can be implemented.
Nguyen Thu Ha, Deputy General Director of Vietcombank, says that Vietcombank’s leaders have not forgotten what they said. Vietcombank is preparing necessary documents for the shareholders’ meeting in April.
Ha said that the plan to list on the bourse in June may fail to keep to the schedule; however, the bank is seeking instructions from the government.
Regarding the plan to look for foreign partners, Ha said that Vietcombank has resumed negotiations with two big financial institutions. However, the happenings on the stock market and the difficulties of the national economies seem not to support Vietcombank.
Sources say that Vietcombank has been trying to look for domestic partners as well. However, the partners say that they are not ready to pay prices equal to the IPO’s average price.
Another big financial institution is also planning to list on the bourse this year, Bao Viet Finance and Insurance Group. The listing plan was ratified by the group’s shareholders’ meeting at the end of 2007.
Le Quang Binh, Chairman of Bao Viet, said that it is not technically difficult for the group to list on the bourse as it has signed a cooperation agreement with the HCM City Stock Exchange. However, Binh said that it is necessary to choose the right moment for listing, ‘which is being discussed by the group’s management board’.
Binh sympathises with investors who have been incurring losses due to Bao Viet share price decreases.
“We know that Bao Viet share prices are decreasing as the market is falling. However, long-term investors should not be too worried about the price ups and downs,” he said

The Vietnam Construction and Import-Export Corporation (Vinaconex) is going to put its listing plan up for discussion at a shareholders’ meeting to be held on April 17
As planned, Vinaconex will increase its chartered capital from VND2tril to VND3tril, while a big proportion of stakes will be sold to foreign strategic shareholders under the consultancy of Credit Suisse.
Vinaconex’s leaders say that they themselves never promised to list in 2007; the listing was decided by the Ministry of Construction, the governing body of Vinaconex, before the equitisation.
Sentiments of big cheese
Even big corporations can make rash announcements that they will list on the bourse, and their promises can affect the investment decisions of many people.
In fact, Vietcombank’s leaders really want to do what they promised. However, the implementation of the plan does not solely depend on the willingness of leaders.
Vietcombank’s IPO was considered successful at the average price of VND107,000/share. However, the bank’s shares are now selling at VND58,000/share only on the OTC market.
If Vietcombank gets permission to list on the bourse as an exception, what will it declare as a starting price for its shares: VND107,000/share to protect the interests of the majority of shareholders, or VND58,000/share, the current market price, or a third price level, between the two price levels?
PVFC (PetroVietnam Finance Company) is also facing the same problem. The company has set the starting price for listing equal to the IPO average price, which is much higher than the current market price of VND37,000/share.

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