Stock Market 2015: Opportunities from Challenges

The stability of the stock market in 2014 has attracted much more attention from many investment funds in the world. Besides investment funds that have been operating effectively in the stock market in recent years, and many new funds have also repurchased shares of listed companies, leading to both negative and positive changes in the stock.

 

According to Kevin Snowball, CEO of the PXP Vietnam Asset Management Fund, after the Mondelez International Fund purchased an 80 percent stake of the Kinh Do Corporation listed on the stock market, many investors were concerned because the restrictions on foreign ownership in Vietnam are less effective on such transactions. And it is said that this fund is likely to purchase the remaining 20 percent stake. "Its pointless for the market to allow foreign investors to buy 100 percent of the assets of the listed company in the form of the assets placed in a subsidiary accounting for only 49 percent of a listed entity. The risk here is that if the market is too open for foreign investors to acquire subsidiaries, it will inevitably turn into a classified ad market," said Snowball.

 

Besides, equitisation of state-owned enterprises has also become a concern of investors due to slow investment process but increasing IPO. According to experts, although the stock market has a lot of changes, the structure is not yet to complete because the large proportion of the stock market belongs to individual investors, leading occurrence of price offers on the market. To seriously increase the attraction of the market, we need a good mechanism to attract the participation of foreign investors.

 

Alil Rasheed, Director for Southeast Asia at Invesco, said the Vietnam's stock market is currently operating as a private equity market and there is not a clear and ready mechanism for international investors and organisations. These restrictions on after-payment transactions and processing time in currency swaps are less attractive to investors.

 

Not only mechanisms and policies, but also market size is not balanced enough to appeal to investors, which limits choices of investment funds. Currently, the top 10 indexes on the stock market accounted for approximately 80-90 percent of the stocks belonging to state-owned enterprises. In addition, the corporate governance of Vietnam is not in accordance with the standards of many Southeast Asian countries.

 

Assessing the chances of the stock market in 2014, Nguyen The Minh, Analyst of the Bao Viet Securities JSC, Vietnam's economy is in recovery phase but still slow so investment packages are not attractive enough to investors so the stock market remains preferred by investors; in 2015, the VN-Index may exceed peak of 2009 (630 points) or even exceed 660 points in the first quarter and second quarter of 2015.

 

2015 is a pivotal year for important events related to the economy in general and the stock markets in particular, like the TPP negotiations, the FTA and the more open policies for foreign investors, which will turn the economy and stimulate further development of the stock market into a new chapter. Therefore, investors will have many more choices.

 

Another factor that will also affect the stock market in 2015 is the oil price. Continuously declining oil prices in the last months of 2014 is causing a negative impact on the stock market; this has decreased the prices of the stocks of the oil and gas companies. If oil prices hold steady or increase in 2015, it will also create opportunities for the stock market.

 

Opportunities for Vietnam's stock market in 2015 are still very big but to create a professional stock market with the active participation of the foreign investors and international funds, Vietnam's stock market needs more work to be done.