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Uncertainty causes investors to hold back
Institutional investors, particularly investment funds, are showing signs of hesitation in investing in the Vietnamese stock market, with many delaying investment until they can see more certainty in national markets.
Luu Nguyen Chi Nhan, Deputy General Director of the Sai Gon-Ha Noi Fund Management Joint Stock Company, said the securities market was still attractive to a majority of investors, especially in the context of record high gold prices.
"The real estate market, on the other hand, takes time to flourish," he said.
"However, investors still had great concerns over hot issues such as high interest rates, rising inflation and particularly the increasing value of the US dollar on the black market, despite the State Bank of Viet Nam saying it would not adjust the exchange rate at the current time."
Investment fund SAM's General Director Louis Nguyen said foreign investors were still interested in Viet Nam but thought the current time was not appropriate for investment.
Nguyen said though many believed that "hot money" was flowing into emerging markets including Viet Nam, this phenomenon was not shown clearly in the Vietnamese stock market.
"Foreign investors currently do not have plentiful choices for investment," he said. "There are not many shares which have both sound basic indicators and high liquidity, and are blue-chips at the same time."
Uncertainty over of the domestic monetary policy had resulted in many being unwilling to invest now, he said, noting foreign investors had lost 10 per cent of their investment value from the beginning of this year, which was caused by exchange rate fluctuations.
"However, share prices in Viet Nam's securities market are rather cheap and we are continuing to buy shares in medium-sized companies which have good growth rates," he said. "But it will take a rather long time for the market to rebound."
One director of a HCM City-based fund management company who asked to be anonymous said many investors expected the market to fall further.
Phan Phuong Anh, General Director of MB Capital Fund, said many investment funds were averse to taking risks and restructured their portfolios in accordance to rising inflation and exchange rates, particularly while companies' corporate results showed no sudden increases.
Nevertheless, the draft law on securities, if approved by the National Assembly this year, could help funds attract new investment as the law permits the establishment of real estate investment funds, Anh said.
In addition, the guidance circular on the performance of fund management companies with clearer regulations on open-end funds which the State Securities Commission was preparing was also expected to help funds draw more investment.
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