Good Morning, Vietnam
The Vietnamese stock market is hotter than a Saigon moped saddle in the sunshine. The Ho Chi Minh City Securities Trading Centre, which opened in 2000, lists just 24 stocks. Yet the HSTC has double-digit percentage growth so far this year. Both foreign investors and the communist government are pushing for further liberalization of the economy and the HSTC. As it stands, the bourse has a slothlike feel of an emerging market, but with the added oomph of an Asia tiger whose hormones are just kicking in.
Ex-pats living in Ho Chi Min City (once known as Saigon) have been in on the secret for a while now, and with the Asian economic flu finally in remission, the word is spreading. The U.S. markets may be flat, but Vietnamese stocks have been showing a return on investment of 20 percent for the last three years. Buying shares in Saigon is no easy feat, however. To get to the bank, an investor must brave the heat and the insane motorbike traffic, which makes Manhattan look like Mississippi.
Having changed a brick of dollars for a bag of Vietnamese dong, a hopeful investor must visit one of the securities companies, such as Bao Viet Securities Company, and register for an account. Bao Viet feels like a provincial Greyhound station. A clerk walks around with a coffee can, offering random numbers that give the order in which people are served. At the given time, the young clerks in shirtsleeves type as quickly as possible to transmit the order to the exchange, where the trading is done electronically. The exchange itself isn't any livelier, though it plans to move into a bigger building soon.
Vietnam's economy is going capitalistic, China-style. According to the General Statistics Bureau, since the passing of the Enterprise Law in 2000, an average of 1,600 new private enterprises have opened per month, with a total registered capital of $9.5 billion. The value of Vietnam's export markets has grown — in 2003, from $3 billion in 1993 to $19.8 billion. More impressive, the amount of foreign direct investment rose from $230 million in 1990 to $41 billion in 2003. Just from 2000 to 2003, foreign direct investment jumped from contributing 20 percent to Vietnam's GDP to 30 percent.
Recently, the Vietnamese government has stepped up its bid to join the World Trade Organization, and has earmarked around 2,000 (out of the 4,704 total) state-owned companies for privatization and eventual listing on the exchange, plus it is changing the law to make things easier for foreign investors by altering trading procedures, foreign holding ceilings, daily movements, trading hours, remittance of profits abroad and taxes.
So far, four foreign funds have opened, all closed-end. They are:
- VEIL (BVI) which is owned by Dragon Capital and is the largest at $70 million, and is also considered the most professional. The World Bank has invested around $15 million in this fund.
- The Vietnam Opportunities Fund is new, managed by an overseas Vietnamese and has around $10 million.
- PXP is quoted on the Irish stock exchange, has $5 million and is named after Vietnam's highest mountain. British ex-pat Kevin Snowball, director of PXP Asset Management, said recently, "Vietnam's stock market should be home to large-scale and well-performing companies if it is to attract more foreign institutions." Indeed, foreign investors are said to be hungry for more than just numbers one to 24 on the menu. The market had attracted 106 foreign individual investors and 21 foreign institutional investors.
By Joseph Gallivan - The New York Post - August 29, 2004
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