Vietnam has a good chance of attracting portfolio investments that are being withdrawn from other Asian markets since investor confidence in the country is improving, an analyst has said.
News website Saigon Times quoted Ong Seng Yeow, research director of securities brokerage Maybank Kim Eng Holdings Ltd, a unit of Malaysia’s largest bank, as saying Saturday that Vietnam is a preferable destination for foreign investors because of the political tensions in Thailand, an extremely overvalued stock market in Indonesia, and few cheap stocks available in Singapore.
International investors and institutions are keenly watching the ongoing revival of the Vietnamese economy, he said.
The massive exodus from emerging markets due to the winding down of the US stimulus has led to a sharp depreciation of many currencies, with the exchange rate against the dollar falling 16 percent in Indonesia, 12 percent in Thailand, and 4 percent in Singapore last year.
But the Vietnamese dong only weakened by 2 percent as a result of the government’s efforts to curb inflation, Ong said.
Besides the stable currency, the government's policies to stabilize the economy, a transformation from the previous red-hot credit growth in the banking system, and rapidly growing foreign reserves -- now equivalent to four months of imports -- are increasing investors' faith in Vietnam, he said.
Most of his firm’s clients are hopeful that in the long term the country's economic growth would go back to above 7 percent, he said.
Investment plans in Vietnam should be considered soon, he said.
Investors’ pullout from emerging markets beginning last June lasted only three months in Vietnam but is continuing in neighboring markets, he said.
Two out of three exchange-traded funds in Vietnam have increased their investment, he said.
International investors have withdrawn US$22.2 billion from emerging markets in the first two months of this year, Bank of America Merrill Lynch Global Research reported.
Ong said investors are also watching the privatization of the state sector and cleanup of bad debts, adding that the government should speed up the process.
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