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Foreign portfolio investment capital flowing slowly   2010-12-02 - Tuoi tre

A lot of big names such as Goldman Sachs, Deutsche Bank Trust Company Americas have entered Vietnam’s market by injecting their money in Vietnamese enterprises.


The appearance of the big guys on Vietnam’s market has made people think that a new portfolio of foreign investment flow is returning to the country. However, analysts say that if compared with the huge capital sums of billions dollars poured into neighboring markets, the capital flow to Vietnam proves to be too modest. Meanwhile, other experts say they can see foreign capital flowing to Vietnam, but it seems that foreign investors remain cautious about the unoptimistic macroeconomic indexes of Vietnam.

The big guys

Do Khang Ninh, General Director of PV Gas, said that when the company offered to sell 15 percent of capital to strategic partners after it organized an IPO (initial public offering, 40 institutions, mostly foreign investors, registered to purchase PV Gas shares. Ninh said that the volume of shares the investors registered to purchase exceeded 20 percent of PV Gas’ chartered capital.

Most recently, Goldman Sachs Investment Partners under the US Goldman Sachs group has signed an investment contract on investing $25 million in convertible bonds of CII, a HCM City-based infrastructure company. Goldman Sachs has also revealed a plan to invest $15 million more in CII. However, the investment plan still needs to be approved during CII’s shareholders’ meeting.

Several days ago, Goldman Sachs reached an agreement with Masan Group (MSN) on a 5-year loan worth $30 million.

The fact that Macquarie, who belongs to the famous Australian group Macquarie Group, became the strategic partner of Vina Securities under VinaCapital, also shows an optimistic view in the context of Vietnam’s quiet stock market. Indochina Capital, an investment fund has announced it has raised more than $180 million worth of funds for the new investment fund in Vietnam.

A cautious optimism

General Director of VinaCapital Don Lam said that in 2010, the foreign portfolio investment to Vietnam seems to flow slower than to other neighboring countries. It is because, according to Don Lam, foreign investors have worries about the stability of the value of the Vietnam dong, even though they know that the trade deficit can be offset by foreign direct investment (FDI) and kieu hoi (or overseas remittance – the money sent by overseas Vietnamese to their relatives in Vietnam).
Observers said foreign portfolio investment has begun flowing into Vietnam, but the flow is slow and cautious.

Dinh The Hien, a financial expert, said that now is the right time and the golden opportunity for foreign institutions to become strategic partners of big Vietnamese companies.

Hien said that if foreign investors buy stakes of Vietnamese companies at this moment, they will be able to get shares at low prices and buy in large quantities.

Several years ago, when Vietnam’s stock market witnessed a hot development foreign investors could not set foot in Vietnamese companies despite how much they really wanted to. It was because of the high prices of stakes and the overabundance of buyers.

“At this moment, it will be easier for foreign partners to purchase stakes and obtain advantageous conditions in negotiations,” Hien concluded.

Meanwhile, Don Lam said that many investors feel insecure about Vietnam’s local currency. “In general, Vietnam remains an attractive investment destination. When Vietnam becomes stabilized, the foreign portfolio investment to Vietnam will flow more strongly,” he said.

He went on to say that the government of Vietnam needs to cooperate with the business community to provide enough information to investors, especially the information about the advantages of Vietnam’s economy.

He said that he is optimistic about the flow of investment capital in the future, because he has received positive responses from investors after the international investment conference held by VinaCapital recently in Vietnam.

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