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Overseas Vietnamese shun stocks
Overseas remittances have increased steadily year by year, and while a large proportion of remittances end up being invested in real estate, just a tiny proportion has been put into the nation's stock market, Gardners&Partners Investment Joint Stock Co general director Nguyen Tien Thanh has said.
Just five years ago, most remittances flowed directly into consumer spending, but more Vietnamese expatriates were now paying greater attention to investment opportunities in the home country, Thanh said.
Overseas remittances hit a record high of US$9 billion in 2011, an impressive increase over 2010's $8 billion and accounting for 9 per cent of the nation's GDP. This moved Viet Nam into the list of the top 16 nations around the world in terms of overseas remittances received.
Amost 50 per cent of these remittances last year were invested in the real estate sector while deposits in banks accounted for 24.7 per cent and consumer spending 19.4 per cent. Only 0.9 per cent were put into the stock market.
Few Vietnamese expatriates were keen on Viet Nam's stock market due to heavy speculative tricks and insider trading, Thanh said. Many Vietnamese expatriates were also afraid to entrust money to investment or fund management companies for fear of wrongdoings.
"The possibility of detecting such deeds, and the penalty levels in Viet Nam are limited," he said.
Overseas remittances were forecast to reach over $12 billion this year, Thanh said, and if only 10-20 per cent of this amount were poured become the stock market, it could help the stock market become a more effective channel for enterprises to raise capital.
"It will take some time to lure this money into the stock market," he said. "The length of time will depend on how successfully the market can be reformed."
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