Thao Nguyen
Seng Yeow, head of analysis unit of Maybank Kim Eng Securities Company - Photo: Thanh Thuong
Speaking at a seminar on foreign capital flow and the stock market in HCMC last week, Seng said that most regional currencies have devalued and foreign capital has been running out of emerging markets after the U.S. has reduced its bond buying.
Indonesian rupiah has devalued by 16%, Thai baht has lost 12% and Singapore dollar has declined around 4% against the greenback. Meanwhile, Vietnam dong has remained stable, dropping only 2% in 2013.
In fact, foreign capital withdrew out of Vietnam in the Jun-Sept period in 2013 but then the investors returned to the buying side. Meanwhile, the investors kept withdrawing from regional markets.
In the first two months of this year, exchange traded funds (ETFs) still strongly invested in Vietnam.
At present, inflation has been put under control while interest rates have slid. The dong-U.S. dollar rate has been stabilized and is expected to increase just around 2-3% this year, Seng said.
In addition, credit growth rate has slowed down and tax incentives for enterprises are supporting economic stabilization. Confidence of foreign investors in Vietnam’s economic growth has been strengthened, so they have strongly disbursed into the stock market via ETFs lately.
“Talking to institutional investors, I have seen that most investors are expecting that the nation’s gross domestic product (GDP) growth rate to recover to over 7% but this is long-term expectation. In reality, it will take Vietnam a lot of time and effort to reach this target. However, they think that it is about time to invest in Vietnam,” Seng added.
However, Seng said the Government should finish issues such as restructuring of State-owned enterprises (SOEs) and the banking system. Besides, investors are also interested in bad debt handling by Vietnam Asset Management Company (VAMC), hoping that over VND100 trillion worth of bad debts will be tackled within this year.
Application of non-voting depository receipt (NVDR) has helped Thailand’s stock market improve liquidity. So, Vietnam should also apply this product to lure foreign capital.
Besides, foreign investors expect that SOEs equitization will help launch more products on the stock market.
Đăng ký: VietNam News
