Economic measures, higher foreign ownership cap to lure foreign stock market investors

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The government's efforts to strengthen the economy and a proposal to increase the foreign ownership limit in domestic firms are likely to attract more foreign portfolio investors to Vietnam, analysts said.

Trinh Hoai Giang, deputy director of the Ho Chi Minh City Securities Corp. the biggest foreign stock brokerage in the country, said the market outlook is positive.

The government has been making strenuous efforts to curb inflation and keep the dong stable, the two biggest factors for investors in deciding to buy stocks, he said.

The US$200 million they have pumped into the market in the last two months shows investors are no longer waiting and watching, he said.

The HCM stock market's benchmark VN Index rose sharply during the period.

But its PE ratio was still only 11 compared to 15-18 for other bourses in the region, he poined out.

The purchase of government bonds has also increased sharply, he said, the first positive sign for the market since a slew of bond investors withdrew five years ago.

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"During my business trips abroad, many investors I met "¦ said the Vietnamese stock market is changing in a positive way."

Speaking on condition of anonymity, a director of a fund said investors would buy more if the foreign ownership cap is increased.

The State Securities Commission proposed at the start of this year an increase in the ownership limit for overseas investors from the current 49 percent (and 30 percent in banks).

Bloomberg said in a report that the Vietnamese stock market has been the "best performer" in Asia this year after the VN Index rose 16 percent since the end of December to 479.79 on January 31.

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