Vietnam - Investment funds wavering between coming back and staying on

VietNamNet Bridge – Despite the current big difficulties, some foreign investment funds still have decided not to leave Vietnam. This is really the good news for Vietnamese stock market.

It’s time to make decision about leaving or staying

Thanh Nien has reported that the Vietnam Enterprise Investments Limited (VEIL) and Vietnam Growth Fund Limited (VGF), which both are managed by Dragon Capital, specializing in making investment in listing shares, would stay in Vietnam until December 31, 2014, at least.

The decision was made on October 5 at the 2012 annual general meeting of shareholders. As such, Dragon Capital has successfully persuaded the investors to extend the funds’ operation in the Vietnamese market.

The extraordinary shareholders’ meeting of the Vietnam Equity Holding VEH and Vietnam Property Holding VPH--being managed by the Saigon Asset Management (SAM), also approved the plan to extend the operation of the funds in Vietnam by three years.

SAM has obtained the agreement after it committed to continue the program to buy treasury fund certificates and turn the two close-end funds into open-end funds in 2014, which would give more choices to investors.

Dominic Scriven, General Director of Dragon Capital, when commenting about the decisions, said this shows the shareholders’ confidence on the investment opportunities on the promising market.

The success of Dragon Capital has much significance if noting that in 2010, the two funds were once under the pressure put by the group of new shareholders - VR Capital, who insisted on closing the funds.

Finally, only 11 percent of VGF and 17 percent of VEIL agreed to the closing at the end of 2012.

Now Vietnamese investors can sigh with relief when some big investment funds have announced their decision to stay in Vietnam. Prior to that, rumors were spread that a lot of funds would get dissolved, when the net asset value of many funds have dropped dramatically, thus making investors pessimistic about the opportunities in Vietnam.

Management companies think of designing new products

The figures about the net asset value of investment funds and the prices of fund certificates all show the ineffective performance in investment activities. However, even if the fund management companies try to the utmost, the market risks would still bring undesired effects.

This is the reason why Andy Ho, Managing Director of VinaCapital, said he cannot predict the decision to be made by the investors. However, he said, in all cases, the financial products would be enough for fund management companies to keep their normal operation.

For example, individual investors would not be able to buy Masan and Halico shares, because the share issuers target institutional investors. Meanwhile, if individual investors join institutions, they would have the opportunities.

While the information about the continued presence of some foreign investment funds makes Vietnamese investors excited, some observers still have doubts about the feasibility of Vietnam to retain the capital flow in long term.

Louis Nguyen, General Director of SAM, said SAM is now raising funds for the two funds to invest in the energy and agriculture sectors – the two most attractive fields in Vietnam.

However, he admitted that it is very difficult to call for investment capital now.

Vinafund VMF plans to set up the funds to be capable to attract investors. However, due to the market problems, the plan to sell VFMI30 certificates has been delayed.

In related news, MB Capital has recently applied for the establishment of an open fund which would invest in government and guaranteed corporate bonds.

Compiled by C. V

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