VietNamNet Bridge – The low stock prices and the strong recoveries of the national economy’s indexes in the fourth quarter of the year explains why Vietnam still can attract foreign capital.
Time for foreign investors to spend money
Asia Frontier Capital Limited, a fund management company which specializes in making investment in Asian nascent markets, has announced that it has raised a new fund - AFC Vietnam Fund with $50 million worth of capital. This is an open fund targeting growing businesses, especially small and medium enterprises.
Analysts have noted that foreign capital is coming back to Vietnam. In November 2013 alone, 72 foreign investors were granted securities trade codes by the Vietnam Securities Depository Center (VSD), which included 35 institutional investors.
VSD has reportedly granted trade codes to 676 foreign investors so far this year, including 412 individual and 264 institutional ones.
By November 2013, 16,677 foreign investors have gotten trade codes, including 2,243 institutional and 14,434 individual.
VCB Securities Company believes that one should not expect the strong foreign capital flow to Vietnam like the one in the last period, but it is highly possible that foreign investors would buy more than sell in the time to come, which would help warm up the market.
Vietnam stock prices are “very reasonable,” while the key indexes have shown the strong recovery of the national economy, which promises the better improvement in the next year. These might make foreign investors think that they should pour money into Vietnamese stocks right now, which would help them make profit later when the economy warms up.
Analysts have every reason to believe that the stock market would witness a robust growth in the near future thanks to the strong foreign capital inflow. The market has been backed by the information about the possible lifting of the ceiling foreign ownership ratios in Vietnamese companies.
Foreign capital has always been playing a very important role in the market development. The presence of foreign investors in Vietnam not only provides more capital to the market to create more transactions, but also help domestic investors feel more optimistic.
An analyst has noted that under the economic laws, foreign investors usually make disbursement in December and the first quarter of the next year.
Where will the money go?
Le Duc Khanh, a senior executive of Maritime Bank Securities, believes that the market would be more bustling in the time to come, which would lead the VN Index to the 518 point threshold. Bluechips would remain the safest choice for investors at this moment.
Also according to Khanh, the capital would go to the shares with high and medium market prices, especially the shares in ETFs’ investment portfolios.
Money would also be poured into the two groups of shares expected to see high growth in the future.
The first group includes the shares of the profitable businesses, while the second includes the shares of the businesses in the fields to enjoy benefits from the state’s policies. The businesses could be real estate and building material firms which have been most favored by short term investors.