Vietnam - Foreign investment in Vietnam stocks remains meagre

Despite strong foreign buying in the local securities market in the first quarter, no fresh capital sources have come to the nation from the outside, said market observers.

In the first three months of the year, foreign investors had spent some 11.7 trillion dong buying shares and 10.1 trillion dong selling stocks, with net purchases amounting to around 1.6 trillion dong, said the Hochiminh Securities Joint Stock Company (HSC). This figure is better than the 700 billion-dong-plus in the last quarter of 2011, with foreign investors contributing a combined 24-25 percent of total trading value on the market.

Serving the most foreign investors, HSC in the first quarter saw foreign investors accounting for 22 percent of transactions on the whole market, up by 3.5 percentage points from the preceding quarter.

The situation proves the absence of new cash flow into the securities market where total trading value amounts to 92.5 trillion dong, up from the 55.5 trillion dong recorded in the fourth quarter last year, said Johan Nyvene, chief executive officer of HSC. More foreign customers have just opened trading accounts at HSC but the amounts they have poured into the stock market have been insignificant, Nyvene said.

According to Nyvene, the slowing foreign capital increase is due to the 'see-and wait' attitude among foreign investors.

Falling inflation, stable exchange rate, declining interest rates, and lower P/E and P/B ratios have yet to catch the attention of foreign investors who are still favouring Indonesia as a stronger economy, he noted, adding it would take some more time.

Meanwhile, Don Lam, chief executive officer and co-founder of VinaCapital, said he believed some foreign investors were considering long-term investment in Vietnam thanks to the government's achievements in taming inflation and stabilising the macro economy, he said.

However, he said there would be no additional inflow of foreign funds into the securities market at present. A liquidity improvement in the first quarter just came from existing foreign investors.

Similarly, a recent report by Rong Viet Securities Co. indicated the modest foreign investment increase. It expected such a slight surge in foreign capital flow would leave positive impacts on the stock market, particularly share prices.

Saigon Times

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