Foreign capital increased investment
According to Bloomberg, global fund managers have begun to return to the Vietnamese stock market. In particular, investment funds including Ashmore Group Plc, Coeli Asset Management SA have increased the proportion of Vietnamese stocks since March, while foreign investors have returned to net buying since the beginning of the month. 6, the first time since January 1, 2020 to date.
Specifically, Coeli Asset – a Swedish-based investment fund has increased the proportion of Vietnamese stocks in the portfolio from 18.6% in early 2020 to about 25%, starting buying shares since from the sell-off in March. The portfolio value of the fund’s margin market is about US $ 350 million.
“The P / B (Market price / book value) index of stocks in Vietnam has been very low over the past 18 months and does not accurately reflect the long-term potential,” said James Bannan, manager. Coeli Asset investment fund said.
A number of other foreign funds attached to the Vietnamese market also increased their stock exposure. For example, the PYN Elite Fund manages assets of 389 million euros (as of the end of May 2020), of which 94% pour into stocks and cash at 6%. Earlier, at the end of March, PYN Elite held 9% of cash.
Along with the cash flow from domestic investors, the foreign cash flow has created a motivation for the VN-Index to increase by 28% since the beginning of April, becoming the second positive growth market in the world even with a 6% down in recent sessions.
The attraction of Vietnam
One of the factors that help increase the attractiveness of the market is that the domestic currency maintains strength, while the conflict between the two largest economies in the world pushes the attention of businesses / investors. Global to Vietnam, this is the place to establish alternative supply chains for China.
In particular, Apple Inc is one of the most prominent names, wanting to transfer a part of its production activities to Vietnam.
“The VND has remained stable since the beginning of the year, mainly due to a large trade surplus and stable foreign currency reserves,” said Ruchir Desai, a fund manager at Asia Frontier Capital Ltd. VND is the Asian currency that has had the best performance in nearly 6 months, when it decreased only 0.2% against the USD.
In Vietnam, investors can enjoy dividends at 3-4%, 3 – 4% bond interest rates and 6 – 7% term deposits.
Mr. Andy Ho, Head of Investment Department of VinaCapital shared that foreign investors are attracted by many factors in Vietnam market, especially when this object is being approached with new capital flows of 6,000 billion dollars that governments of the developed countries pump into the economy to support the epidemic.
“We believe that foreign investors who have access to capital injected into economies are paying more attention to the Vietnamese market. The reason is that Vietnam offers greater returns than investment options in their country, where bonds are traded at negative interest rates, term deposit rates are also below zero, Dividend income is only 1-2%. Meanwhile, in Vietnam, investors can benefit from dividends at 3-4%, 3 – 4% bond interest rates and 6 – 7% term deposits, “Mr. Andy said. Ho said.
Besides, the political situation and business environment in Vietnam are very stable. When investors decide to invest in Vietnam, they can see that the depreciated assets and currencies remain stable, it is difficult to lose profits due to the devaluation. The purchasing power of the market of more than 90 million people attracts many businesses, as well as domestic and foreign investors.
According to VinaCapital, developed countries are pumping about US $ 6,000 billion to recover the economy and this capital inflow will support the global stock market. Vietnam has experienced strength from new capital flows, such as the VN-Index increased by nearly 50% in 2017 when the European Central Bank issued $ 1,000 billion in new money.
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