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Foreign investors take advantage of falling stock prices
The declining stock market is proving an advantage to medium and long term investors who are buying potentially valuable shares for low prices.
The Government’s goals for 2008 is an economic growth rate of 8% to 9% and inflation below that, a stable exchange rate encouraging export, and a bustling stock market.
However, as the second month of this New Year comes to a close, the reality of this year’s economic challenges are beginning to take shape: inflation is through the roof (12.63% in 2007), and there is an at-capacity real estate bubble.
The central bank responded by withdrawing VND20tril from circulation, a necessary move to curb inflation, but it is also revaluating the VND against the dollar and adversely impacting the stock market.
The Government is now getting hit from all sides, under pressure to improve every economic facet. Commercial banks are all trying to raise deposit interest rates, raising the lending interest rates, thus putting a heavier financial burden on businesses.
However, despite the challenges, investors still see long-term potential in the stock market. And savvy investors know the market’s falls is only to their advantage.
“We will still invest in Vietnam’s companies,” said Andy Ho, Managing Director of Vina Capital, adding that though share prices have fallen, they remain relatively high.
Short-term investors are struggling, they are responding to the market rather than anticipating it. Tim Dattles, an investor with wisdom and who hunts for subtle opportunities is Managing Director of TPG Capital, a big private investment fund from the US; he says TPG is still hunting for stock of rising companies in Vietnam and China.
Vietnam is an attractive market. However, stock prices were inflated in 2007 and there was a supply shortage. TPG has an eye on Vietnam’s bourse and knows it is likely to rise in the coming time, he said.
Experts say that for medium and long-term investors, Vietnam’s portfolio investment market is full of opportunities.
There is also some concern that the wallowing US economy may negatively impact Vietnam, as big international investors may restructure their investment portfolios and reduce investments in small and changeable markets like Vietnam.
Ho from Vina Capital said that he cannot anticipate how foreign investors will responded to the decline of Vietnam’s stock market. Vina’s last fund raising took was in November 2007 in London, when Vietnam’s market hadn’t yet hit its point of fastest decline.
VNN
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