Foreign investors rush to fill stock market vacuum

While Vietnamese investors are rushing to sell stocks out of fears brought on by current uncertainties, foreign investors are injecting money into Vietnamese stocks, anticipating a cheaper products attractive, the English language news website VietNamNet Bridge reported on May 19.

Vietnam National Television (VTV) has quoted sources as saying that foreign investors have spent over 1.5 trillion VND for Vietnamese stocks in the last two weeks.

The sharp drops of stock prices are the main reason foreign investors are buying now. The VN Index, after climbing to its highest peak of 610 points, in just one month has plunged 100 points, sinking to its deepest low so far this year. Shares in the market have seen their prices drop by an average of 25-30 percent from last year’s record high levels.

Pham Ngoc Bich from Vietnam Holding, an investment fund, commented that it is the right time for investors to pick up bargains. “The shares were much more expensive three months ago,” Bich was quoted as saying.

And foreign investors are continuing to buy, despite the securities index tumbling in the last 17 consecutive trading sessions as of late last week. The net purchase volume of foreigners reportedly once reached 300 billion VND in a single day of trading.

PXP, a large foreign investment fund, is sticking to its plan to invest in the Vietnamese market. PXP Asset Management’s Director Kevin Snowball has remained optimistic about the investment deals, saying that the average P/E (price on equity) ratio of 12.5 in Vietnam is really “attractive”.

The director said in local newspapers that foreign investors who are following long term investment strategies all believe that the current uncertainties will not last long. Therefore, they believe that now is the right time to buy shares at bargain prices. He went on to say that he plans to raise more funds in a couple of weeks to disburse on Vietnamese stocks.

CNBC, the US television channel, has also commented recently that though the Vietnamese stock market has lost all the points it accumulated so far this year, it is now the right time for investors to buy Vietnamese stocks.

David Kadarauch, Analyst Director of ACB Securities, and an international expert, has also said on VnExpress that international investors are pouring the most ever money into Vietnam to hunt for cheap shares. In an interview given to the newswire, he said foreign investors believe that China will ultimately have to remove its oil rig, though the sovereignty dispute will not be resolved anytime soon. Despite that persisting uncertainty, foreign investors in general remain optimistic about Vietnam’s economy in long run.

They think they now have great opportunities to buy blue chips like FPT, IJC, BMP, MBB and HSG.

In March and April, the trading value per trading session on both the Hanoi and Ho Chi Minh City bourses was mostly at between 100 million USD and over 200 million USD. In general, once the liquidity reaches these levels at newly emerging markets, international investment funds pay more attention to the markets. This is the reason foreign investment funds have been visiting Vietnam more regularly than ever.

According to the news website, Kadarauch believes that a 700 point VN Index is within the reach this year or the next.-VNA

Source: Vietnamplus

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