Stock market reports strong inflows of foreign investments

TN News

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Vietnam's stock market, the second best performing market in Asia with its benchmark VN-Index climbing 21 percent in 2013, saw robust growth in foreign portfolio investments last year.

Foreign investors injected US$325 million into the stock market, up 55 percent from 2012. The total number of portfolio investors was greatly expanded with 728 new ones, 291 of which were organizations.

The country's indirect investments have risen by $12.2 million as of January 3 from December 31, 2012.

According to analysts, foreign exchange-traded funds like the US-listed Market Vectors Vietnam and the FTSE Vietnam UCITS helped the major benchmark in Ho Chi Minh City rack up the strong increase of 21 percent.

Last year the market welcomed a number of new funds including the AFC Vietnam Fund, which invests in domestic listed equities with a target size of $50 million.

Analysts said international investors had noticed the government's ongoing consideration of higher foreign ownership limits, from the current 49 percent to 60 percent in non-banking businesses, which began last quarter.

Trinh Hoai Giang, deputy director of the HCMC Securities Corp., which holds the biggest foreign brokerage market share in Vietnam, forecast higher growth of foreign investments in the country's two exchanges if the country raises the cap.

Relatively low price-to-earnings ratios at domestic firms compared to those in regional countries and persistent profit growths of the top 100 businesses in the market already act as a magnet for foreign portfolio investors, he said.

Giang expected those factors to continue boosting indirect investments this year.

But Louis Nguyen The Lu, general director of fund manager Saigon Asset Management, said there would not be such a strong pace this year given the struggling economy and a banking system grappling with high bad debt ratios and cross ownerships in banks.

He urged the government to get tougher on such issues.

Meanwhile, the director of a Japanese-owned fund manager said his firm is concerned about the mall market capitalization despite steady growth in recent years.

The figure climbed to $40 billion, however, it is still an eighth the size of Thailand's and a tenth the size of Singapore's.

He said the government should expand the size by speeding up privatizations at major state-owned firms to attract more investors.

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