The Vietnamese stock market held its rallying momentum in early 2014 as the VN-Index is moving in the range of 500-505 points. Cash has kept flowing into the market.
Notably, foreign investors continued to be net buyers in the early days of 2014. Top picks included CII, VSH and VCB.
Catching the eye of foreign investors
According to statistics, foreign investors injected up to VND7,667 billion (US$365 million) into the Vietnamese stock market in 2013. Particularly, they spent nearly VND6,330 billion on the Hochiminh Stock Exchange (HOSE) and VND1,337 billion on the Hanoi Stock Exchange (HNX), buying net more than 220 million shares. Foreign capital turnover increased 54 percent in 2013 and their portfolio value increased by some US$3.8 billion over the end of 2012. The Vietnam Securities Depository (VSD) granted 728 securities trading codes for foreign investors, including 291 institutional investors and 437 individual investors. Remarkably, in 2013, the number of foreign institutional investors increased 10 percent.
These figures show that the Vietnamese stock market still catch the fancy of investors, organisations and financial institutions. Especially in the context that fundraising by the closed-end funds is very limited, the presence of open-end funds, especially the strong operation of exchange-traded funds (ETFs) in recent years, promises to boost market liquidity. Besides, authorities, especially the State Securities Commission of Vietnam (SSC), have focused on policymaking to formulate mechanisms and policies to unfreeze the stock market to foreign capital inflows. Specifically, the SSC proposed allowing companies issued shares with starting price below the par value, commonly VND10,000 per share, to help companies to raise capital under the Law on Enterprises. Decisions on foreign room are also being drafted while new products are being developed and completed. Besides, the Scheme and Decree on Derivative Market, the Scheme on the Merger of Stock Exchanges are also underlined in order to catch up with regional and international standards.
Most interested investment channel
According to the State Bank of Vietnam (SBV), Vietnam Asset Management Company (VAMC) bought VND38.9 trillion of principal debts, equivalent to VND32.4 trillion worth of special bonds, from 35 out of 36 credit institutions that submitted requests on selling nonperforming loan (NPL) to VAMC. Thus, after three months of buying bad debts, VAMC had completed its objective of purchasing VND30-35 trillion of bad debts in the form of special bonds last year. Meanwhile, the home-buying credit support package worth VND30 trillion has not produced desired effects when only less than 2 percent of the capital available has been disbursed because borrowing conditions are so tough that many fail to meet the requirements imposed by banks.
Compared with regional countries, the Vietnamese stock market is among the biggest foreign portfolio investment (FPI) because the VND/USD exchange rate remains stable while the currencies of Malaysia and Indonesia have devalued a lot, causing the stock markets of these nations to plunge and foreign capital to flee. The VN-Index advanced over 20 percent last year, becoming one of the best performers in the world. This showed that the Vietnamese economy has passed through the worst point and is recovering. Therefore, a stable trend will stage in the coming sessions as stocks have become the most interested investment channel in Vietnam: Rapid capital turnover, more attractive profitability than other channels like savings, gold or real estate.
(Wall Street Securities JSC)
Vietnamese
