HCMC – The risk of double-dip recession in the world together with changes in the local stock market has created challenges for foreign funds to mobilize capital for investments in Vietnam.
Many investment funds including large ones such as VinaCapital and Mekong Capital have planned to raise funds to invest in Vietnam since 2010 but no new funds are established so far. VinaCapital, for example, failed to set up a stock fund worth US$200-300 million for investing in Vietnam’s stock market.
Besides, the current stagnation in the U.S. and many European countries causes a big challenge for foreign fund managers to mobilize capital from these markets to make investments in the local stock market which has been down since 2008, experts said.
Some foreign investors were reconsidering whether to invest in Vietnam or not, said Andy Ho, VinaCapital’s managing director.
Fund manager Mekong Capital had also been unable to set up any new funds since 2010, said general director Chris Freund. In addition to the local currency instability and inflation risk, the biggest factor determining the possibility of capital mobilization was divestment results of previous investments.
“Divestment results of funds in Vietnam are normally not as good as in China, Indonesia, or India,” Chris said. However, the current results of Mekong Capital and other fund managers were improving gradually through investments in good firms such as ICP, Masan Food, Diana, and Saigon Paper.
He also expected good divestments with a high internal rate of return, facilitating fund managers to generate capital, but said his firm had yet to start new funds.
Foreign funds would invest in Vietnam only when they reduced investments in other markets, according to Fiachra Mac Cana from HCMC Securities Co.
Besides, Vietnam is now not included in an investment list of large funds. However, if they decide to pour only 0.5% of their money into Vietnam, dozens of others would follow suit as they often invest on the trend and grasped chances if noticing any potential markets, said Fiachra.
Several investors were fretting over a wave of divestments in 2012 and 2013 due to the expiry date of funds but Fiachra still remained positive about this.
“If the central bank allows banks to provide stock investment loans next year, local investors will use up all funds of foreign investment funds.”
Chris Freund said good investments like in Hoan My Hospital would raise the value of investment operation in private enterprises in Vietnam. Investment funds normally hold shares of a firm from three to seven years and divestments occur when funds are due to expire.
Thomas Lanyi, investment director of Mekong Capital, said divestments were an inevitable part of stock investment.
By Thuy Trieu - The Saigon Times Daily
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