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Experts say easier foreign access to prop up bourse
Local investors have turned bearish toward the stock market while more foreign funds are queuing up to step in, so policymakers should make foreign access easier to stir up the market, experts said on Monday.
Dominic Scriven, director of Dragon Capital, makes a point at the roundtable organized by Thoi Bao Kinh Te Saigon in HCMC on Monday.
Dominic Scriven, director of Dragon Capital, makes a point at the roundtable organized by Thoi Bao Kinh Te Saigon in HCMC on Monday.
Lam Minh Chanh, chief executive officer of Dai Viet Securities Corp., said at a roundtable organized by Thoi Bao Kinh Te Saigon of Saigon Times Group that it was good time for buying as prices were too low to fall further.
However, Chanh said, “Local investors have somewhat panicked while foreigners have little or no room to pour money into the market.”
He proposed a larger room for the foreign parties and especially some changes in foreign exchange policies so that foreign investors could quickly convert their currencies into the Vietnamese dong for investment.
Foreign ownership is now capped at 30% at commercial banks and 49% at listed firms. In the meantime, the State Bank of Vietnam has recently stopped buying more U.S. dollars for fear of graver inflation.
Trinh Kim Quang, chairman of ACB Capital Management, said, “Foreign investors now find it difficult to bring money into Vietnam as the State Bank of Vietnam is hesitant in buying foreign currency. As far as we know, a central bank can do several things to curb inflation, such as raising compulsory reserves or issuing bonds (to pull money out of the economy).
“More foreign investors are ready to step in but they’re facing some hurdles. We think that foreign ownership should be lifted but the proportion of shares beyond the current cap is not eligible for voting rights.”
Dominic Scriven, director of Dragon Capital, said a different board for foreigners was a feasible way out but unfortunately “we’ve proposed this project for three to four years.”
Only half of the current foreigners are regular traders on the market, so it fails to correctly show foreign sentiment, Scriven added.
The interests of stakeholders – the Government, investors and enterprises – should be equally balanced to avoid dampening investor sentiment.
“The Government plays the role of a policymaker, but at equitized firms, it’s a seller. It seems that the seller just wants to get as big profits as possible,” he said, citing the high reserve price set for Vietcombank shares at the auction last month.
The VN-Index of Vietnam’s major exchange in HCMC, which tends to move back to the 841.27-point level at the beginning of last year, closed down 19.77 points, or 2.3%, to 841 points yesterday.
Many local investors have switched to the realty market as an alternative for investment given the bearish stock market.
Dao Hong Chau, deputy general director of Vietnam Export-Import Bank (Eximbank), said local investors still had a lot of money but they dared not to invest in stocks.
“The stock market has over the past two years raised funds equivalent to the amount the banking system did in 10 years. Money is still abundant. The fact that people recently rushed to buy high-class apartments is good evidence. However, people just don’t want to put more money in the stock market.”
Chau also expressed concerns over the overheating realty market, saying that it might crash as had happened to the bourse.
VNN
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