Bloomberg reports two foreign funds view Vietnam's stock market as being in better shape than regional competitors.
Bloomberg has reported that leaders of Asia Frontier Capital and Coeli Asset Management have spoken highly of the prospects for Vietnam’s stock market given plans to remove foreign ownership limits on listed companies and its strengthening economy attracting foreign inflows.
The VN-Index has climbed 11 per cent this year to August 7, close to its highest point in five years relative to the MSCI Southeast Asia Index, which has tumbled 12 per cent. Even after the gains the Vietnamese gauge is valued at an 18 percent discount to the MSCI regional measure.
Foreign investors had purchased $223.1 million of the country’s stocks this year as at August 6.
While plunging commodity prices and the prospect of higher US interest rates hammer shares from Indonesia to Thailand, frontier fund managers are more optimistic about the outlook for Vietnam, where the economy is growing at the fastest pace in two years and the government is preparing to allow foreigners to increase stakes in certain industries.
“We are generally very positive about the market,” said Mr. Thomas Hugger, CEO at the Hong Kong-based Asia Frontier Capital. “We continue to buy Vietnamese stocks, since we see good economic figures coming out of Vietnam and at the same time the stock market is trading at a discount.”
“The liberalization of foreign ownership limits is a hugely significant event for the development of Vietnamese capital markets,” said Mr. James Bannan, who runs the $130-million Frontier Markets Fund at Coeli in Sweden. “The next critical step in opening up the markets is for the government to sell down its ownership in a large number of listed companies. Governments are rarely good owners of companies.”
He is continuing, he went on, to add Vietnamese stocks and prefers companies reliant upon consumer spending.