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Time to buy

Released at: 01:12, 28/07/2014

Time to buy

Mr Brook Taylor, Chief Operating Officer at VinaCapital, talks about recent happenings in Vietnam's stock market and the overall business environment.

by Thong Dat

The stock market fluctuated strongly in the first week of May. Why did this happen?

Mr Brook Taylor, Chief Operating Officer at VinaCapital

    I think, first of all, that the market has been through a market correction. It rose 22 per cent last year and reached 20 per cent sometime this year. So it is not unusual for the market to have such a correction. We see it is a sign of a healthy market. Unfortunately, events in the East Sea have escalated the amount of pull-back but we don’t see it as a major concern.

Do you think the fluctuation partly resulted from a “herd mentality”?

    Yes, I think so. There certainly are some emotional elements to what is going on in the market. But it is interesting to note that foreign investors are not subject to the same sentiments. It resulted in a good buying opportunity and increased the volume of money in the stock market.

Did the market fluctuation affect VinaCapital’s portfolio?

    No. We saw it as a great buying opportunity. We are long-term investors in Vietnam and we see that the last few years have been very difficult. But the Vietnamese Government has done a very good job in stabilising the economy and we’ve seen signs of growth and stability rising again. So this market pull-back is actually a great opportunity to buy.

Foreign investors continued to buy local stocks during bullish sessions. What do you make of this?

    As I said, international investors are not subject to the same sentiments so they are not caught up in the same concerns over the East Sea. The pull-back was expected even before the recent political events and we see some correction of the stock market as a sign of a healthy market. And yes, this is a great time to buy. I think people who are selling will regret their decision within a few months.

How does VinaCapital view Vietnam’s long-term economic and business outlook and will it continue to invest in the country?

    Actually, we see it is a very good opportunity to enter the market. In fact, VinaWealth, our sister company, has launched their Vietnam Equity Fund, which will focus on listed shares and be available for both domestic and foreign investors. We think it is a great time to launch the new fund, because it is starting just when the market has fallen, but the fall is only temporary and we expect it will continue to rise into the foreseeable future.

What is your advice for individual investor at this time?

    They should remain calm and not panic. There have been a number of political events and concerns and a lot of opinions have been expressed, some of which are right and some of which are wrong. It is important for investors to stay calm and think about why they selected the shares three or four months ago. They were good companies then and they are good companies again today. What has changed? Nothing has really changed. They need to think carefully about selling their holdings in good companies like Vinamilk, other leading companies, and some of the good banks. They were good companies before and are still good companies.

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