Friday, 07/08/2015 11:08

Are billions of dollars heading for Vietnam from China?

Analysts have cautioned the public about assuming that billions of dollar worth of capital will come to Vietnam because of the Chinese stock market problems.


International media has estimated that about $3 trillion worth of capital has ‘evaporated’ from the Chinese stock market.

Some Vietnamese analysts believe that the money may head for Vietnam, one of the most profitable frontier markets.

Nguyen Tu Anh from CIEM noted that the capital outflow from China would be a great opportunity for Vietnam.

If the Chinese stock market continues to fail and the Chinese economy continues to cool down, the trend of investors leaving China would become more apparent.

Meanwhile, Vietnam is a reasonable alternative destination for investors.

Anh also said that the new policy on allowing foreign investors to hold up to 100 percent of stake in Vietnamese enterprises would encourage foreigners to pour money into Vietnamese stocks.

However, Dr. Le Dang Doanh, a renowned economist, noted that it is still too early to say whether the money would flow to Vietnam.

“I heard some analysts comment that Vietnam would get big benefits from the Chinese stock market turmoil because the investors fleeing from China would bring money to Vietnam. But I am not sure about that,” he said.

Le Hai Tra, deputy general director of the HCM City Stock Exchange (HOSE), said he did not know if the huge capital leaving China would go to Vietnam and when it would arrive.

Tra noted that this would depend on investment funds and institutions’ investment policies, though he thinks the new decree on lifting the foreign ownership ratio in Vietnamese businesses could help lure foreign capital to Vietnam.

Meanwhile, an analyst said that one should not entertain any illusion that foreign capital would leave China for Vietnam.

“The capital would not go to Vietnam simply because the Vietnamese stock market remains very small, which cannot absorb trillions of dollars,” he said.

The analyst cited a report of the State Securities Commission (SSC) as saying that the 15-year-old stock market has a capitalization value equal to 32 percent of GDP only, while the figure would be 54 percent if counting the bond market’s capitalization.

“I don’t think big foreign investors will be interested in the Vietnamese market, because they do not intend to disburse small amounts of money,” he said.

Bizlive quoted an SSC senior official as saying that developing the Vietnamese stock market into a larger one with the scale equal to 100 percent of GDP is the most important target for the market management agency.

vietnamnet
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