Foreign investment funds say the prospects for future development of Vietnamese enterprises remain huge and investors need to have a strategic and long term approach.
High P/E but still attractive
Mr Andy Ho, Managing Director of VinaCapital Fund, said VinaCapital’s analysis shows that the P/E (or price/earnings) ratio of 20 currently listed firms’ stocks is about 40. This figure seems high in comparison with the regional ones, but based on the development prospects and potential of Vietnamese companies it is not too high. “The Vietnamese political system is stable, and this is a favourable condition for economic development. I think the Vietnamese economy will develop sustainably and firmly in the coming time. This is the basis for enterprises to secure future development. Thus the current value of stock is possibly high, but if the future prospect is taken into account, there is high opportunity and potential for investment gains,” Mr Andy Ho affirmed.
After the recent international tour to mobilise capital for the formation of an infrastructure fund, VinaCapital is glad to report partners and colleagues showed keen interest in the Vietnamese stock market and wanted investment opportunities. VinaCapital also has many investment plans for the coming time, especially concerning soon-to-be equitised companies and those with IPO plans.
Mr Stephan Lai, Managing Director of Nextview Group, said investment in corporate stocks in Vietnam is an investment in the future, not a short term gamble. When valuing the stock price, market principles should be taken into account, then, the actual benefit can be seen. Not only VinaCapital, but also most foreign investment funds that are already in Vietnam or are going to enter Vietnam are mobilising capital for investment in listed stocks or OTC stocks.
New investment wave
Louis Nguyen, Managing Director of Lion Capital, said about 70 foreign funds are queuing for investment licence in Vietnam. The Lion Fund alone has investment plans for 10 projects. Besides, Lion is preparing the necessary steps to raise an additional US$200 million from domestic and foreign investors for its investment plans in various fields in Vietnam. The Lion Fund is interested in not only listed stocks, but also OTC stocks and IPO stocks.
“I think investment in any market or field contains both opportunity and challenge, but the opportunity in the Vietnamese stock market overweighs the challenge,” Mr Nguyen emphasised. Foreign investors have recognised the potential and opportunity of the Vietnamese economy in general and its stock market in particular. In fact, many foreign funds operating in Vietnam plan to inject more money into Vietnamese companies.
For example, Mekong Capital Fund has invested US$4.5 million in the Mobile World Company, after it launched its third fund which is estimated to have US$100 million.
Similarly, Indochina Capital acquired a 20 per cent stake in Vinamit Company, and VinaCapital bought a 70 per cent stake in Omni Saigon. This demonstrates the acceleration of the foreign investment wave into the Vietnamese stock market. Mr Johan Nyvene, General Director of Ho Chi Minh City Securities Company, said the coming wave of foreign investment into the Vietnamese stock market is clear. Particularly, the private economic sector is expected to develop quickly; hence the opportunity for foreign investors in this sector will be no less than that in State-run or joint stock companies. (Local media)
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