VietNamNet Bridge – Vietnam would open its market doors to 100
percent foreign owned securities companies from September 15. However, experts
do not think that there would not be a new foreign investment wave in the
field.
Fifteen out of the 105 securities
companies in Vietnam have the foreign ownership ratio of 49 percent, with the
foreign partners mostly from Asian countries such as Japan, Malaysia and
Singapore. Other companies have lower foreign ownership ratios, at 15-20
percent.
In some securities companies, the
foreign investors hold 5-10 percent of total stakes, mostly ETF investment
funds. Twenty seven securities companies are listing their shares on the
bourse, while 20 companies have the foreign ownership ratios at below five
percent.
Vietnamese securities companies once foreigners’ focus of interest
In 2011, a lot of foreign
companies in Asia hunted for the stakes of Vietnamese companies with an aim to
take over the companies, once Vietnam officially opens its market to wholly
foreign owned securities companies, slated for 2012.
2011 was the right time for foreign
investors to buy Vietnamese shares, which became the cheapest in the region.
Japanese Nikko Cordial bought 14.9 percent of the stakes of PSI at 15,000 dong
per share. The value of the deal was 133.7 billion dong, or 6.9 million
dollars.
Prior to that, a South Korean
investment and securities company successfully bought roughly 49 percent of the
stakes of EPS Company, planning to buy the whole EPS once foreigners are
allowed to set up 100 percent foreign owned securities companies in Vietnam.
Huong Viet Securities Company
transferred 48.33 percent of stakes to Morgan Stanley (Singapore), while Click
& Call sold 49 percent of stakes to South Korean Golden Bridge Company,
Vietnam Securities Company sold 49 percent of stakes to Malaysian RHB Bank.
Under the Decree No. 58 guiding
the implementation of the Securities Law which takes effects on September 15,
the foreign investors who have been operating in the fields of banking,
securities and insurance for two years at least, now can capital contribution and
buy stakes to possess 49 percent of stakes of a securities company; or buy and
set up 100 new percent foreign owned securities companies.
Market barriers awaiting foreign investors
A banking expert has noted that
foreign investors from Europe and the US tend to buy the whole companies or set
up 100 percent foreign owned companies, instead of holding 65 or 75 percent of
stakes, in order to have the right to manage the companies their own way.
They fear that the cultural and
business differentiations and the viewpoints between foreign and Vietnamese
businessmen would lead to problems.
However, though the market now
opens widely to foreign investors, experts do not think that foreign investors
would flock to Vietnam in masses. No big European or US investment funds or
finance companies has bought the stakes of Vietnamese securities companies over
the last two years.
There are three reasons behind
this. Firstly, the Vietnamese market remains too small with low liquidity in
comparison with the US market, European countries and China. The capitalization
value of the market is modest, just 25-30 billion dollars.
Secondly, there are too many
securities companies (105) on a too small market, thus forcing the companies to
struggle hard to survive and develop.
Thirdly, the legal regulations on
the stock market management are still lacking, thus worrying foreign investors.
Finally, it seems that very few
foreign invested securities companies can make profit, while the majority of
companies did not satisfy with their business results of the last three years.
Translated by Thu Uyen
Business & Investment Opportunities
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