Foreign funds are playing an important role in the Vietnamese stock market.
The State Bank of Viet Nam has not released exact figures, but local commercial banks estimate the amount of foreign capital in the local market to be around 4.8 billion USD.
Many domestic investors are worried that foreign funds, with large capital and a lot of experience, will dominate the domestic securities market.
But, Vu Ngoc Long, a securities analyst who consults for a well-known Ha Noi-based securities company, says there is little chance of this happening.
"Foreign funds are currently increasing their stake in the local market. However, (because of the way the Vietnamese law is set up) a single foreign investor can only own up to 30 percent of an enterprise," he said.
While the law does not stop an enterprise being more than 50 percent foreign-owned, this requires several foreign investors to work together. And research indicates that foreign funds investing in Viet Nam are not inclined to operate in this way, Long said.
James Riedel, a senior advisor on BTA's (Viet Nam-US Bilateral Trade Agreement) project to improve the technology used by the local stock market, said that US investors have paid a lot of attention to the Viet Nam stock market with plans to invest.
One example is US-based Heartland Funds, which is planning to open an investment fund in the stock, real estate and capital markets of Viet Nam together with Lexintion Langha and Vikoa Investment Consultant. The new fund will have a charter capital of 50-100 billion USD.
Long said, "Almost all the money coming into the Vietnamese stock market is coming from overseas funds. It is really a good signal for the market when US investors want to pour more money in."
Currently several domestic enterprises have foreign strategic partners.
Foreign partners hold a 40 percent stake in VF1 and Hong Kong, Japanese and Singaporean partners hold a 33 percent stake in Vietcombank 1.
In addition, the fund deposits of VF1 and Prudential have been drawing more attention from investors, especially the foreign sector.
Cardilla Wishlet, a Canadian diplomat and an investor in Saigon Securities Inc. said: "The market is in adjustment, and all the shares seem pretty volatile. However, as far as I know, fund deposits have the least volatility, so why not invest in them?"
Domestic investors have followed this lead and have also started to invest in fund deposits.
According to several securities company experts, the Vietnamese market has real potential and is therefore a fertile destination for foreign funds. Foreign funds like VinaCapital and Mekong Capital have invested 4 billion USD in the Vietnamese market, opening the way for other foreign funds to come to Viet Nam.
Long said: "With good economic indexes and stable development after the adjustment, more foreign funds will be attracted to invest in the local stock market".
Source: VNA