An investment magnet
Vietnam's stock market is beginning to attract foreign investors. Except for
Bim Son Packaging and Savimex, shares of 15 other listed companies are
held by foreign investors with between 0.002% and 30% stakes.
Good omen. Phan Thanh Long, director of the
HCM City Branch of the Industrial and Commercial
Bank Securities Company (IBS), says his
company recently received email and fax
inquiries for share trading on the Vietnamese
stock market from Asian partners. "Foreign
investors have legal status. They show clear
intentions to invest long-term in Vietnamese
businesses. That's a good omen for the local
stock market," Long says.
There are a number of
individual investors but most are institutional
investors. Some had researched the market long
before the stock exchange officially
opened, and bought shares from shareholding companies before they
were listed. They are Veil Holding Ltd., Venner Group Ltd., Grinling
International Ltd., Kamm Investment Inc., Gold Church, Sun Wah Marine
Product, Siber Hegner & Co. Ltd., and PPMV Nominees Ltd., to name a few.
They bought 24.77% shares of REE, 6.42% of Agifish, 25.22% of Lafooco,
25.57% of Canfoco, and 5% of Transimex before listing.
When the stock market began operation, foreign investors wanted to buy
shares on the stock exchange but they failed because prices were too high
and supplies were few. They could only buy shares since the beginning of
this year when prices have been stable at VND20,000-44,000 per share.
The most sought-after shares are from Tribeco, Gilimex, Lafooco, Canfoco
and Transimex. Recently, Vietnam Frontier Fund authorized the
Bangkok-based Finansa Ltd., which has a branch in Vietnam, to buy
325,460 Bibica shares totaling VND7.5 billion via the brokerage of Saigon
Securities. This is the biggest deal on the Vietnamese stock market to date.
To attract more investors. Officials of the State Securities Commission
(SSC) have expressed satisfaction with the participation of foreign investors
in the stock market. Two years ago, Vu Bang, vice chairman of SSC, said,
"The market only becomes buoyant with the participation of foreign
investors." The presence of foreign institutional investors not only increases
the liquidity of shares but also helps the market develop in a professional
manner. Foreign investors seem not to be affected by information packed
with psychological factors and do not buy shares in mass. In particular, so
far none have sold any of the shares they bought. A foreign investor said,
"Listed companies are efficient businesses. When we decide to buy shares
we aim at the long-term. We do not seek short-term gains."
There are 30 accounts of foreign investors at securities companies, among
them are new names like Wareham Group Ltd., Vietnam Enterprise Ltd.,
Management Link Ltd., and Indochina Capital Corporation. The number
may increase in the future, depending on two factors: The attractiveness of
would-be listed companies and the adjustment of Government Decree
48/CP on securities and the stock market. Foreign investors are expecting
regulations on income tax for securities investment and profit remittance
abroad. When foreign investors buy shares they have to exchange their
currency for the dong. So, they wonder whether they can buy foreign
currency when they want to remit profit abroad and how the foreign
exchange regulation would apply.
Most foreign institutional investors buying shares in Vietnam have
authorized the British investment fund Dragon Capital to manage the
shares. Except a number of investors from Hong Kong, Thailand, the U.S.
and Britain, most are from the British Virgin Islands and Cayman Islands
B.W.I. where income tax is low and business establishment, dissolution and
share transfers are easy. In HCM City, they have offices at 26 Ho Tung Mau
Street and 2 Ngo Duc Ke Street, District 1.
To date, foreign investors can hold at most a 20% share of a listed
company as stipulated in Circular 139/1999 dated June 10, 1999. However,
in some companies, foreign holdings amount to 30%. These are
businesses that sold shares to foreign investors upon equitization.
According to regulations on equitization and Government Decree 45/CP,
foreign investors can hold only 30% maximum of the chartered capital of a
shareholding company. The difference between 20% and 30% is not yet
solved by law makers. This is an obstacle for foreign investors when they
plan to invest in a listed or would-be listed company.
By Hai Ly - The Saigon Times Weekly - June 08, 2002.
|