Stock market accounts for 40 percent of GDP

VNStockNews.com - Vietnamese stock market currently reaches total capitalisation of $38 billion accounting for 40 percent of GDP, in which total portfolio of foreign investors gained $7.6 billion. In the last six months, FII inflow to Vietnamese stock market was estimated at $628 million.

In medium term, Vietnam's stock market is still one of the attractive destinations for investors and market regulators are considering some measures to enhance foreign investment attraction. The messages were sent and discussed at Euromoney's Vietnam Capital and Finance Market seminar on Monday.

Only in a short time, the stock market showed an impressive growth and as a record, VN Index peaked at 1,173 points in 2007 early. Also, in a short time, VN index reserved to slump strongly to 235 pts in the end of 2009.

Many investors assessed that Vietnam is the market with a very strong growth as well as the sharpest slide in the world.

Andy Ho, director of VinaCapital Management Co said that the stock market developed strongly in a short time and investors learnt much experience from the overheated development of stock market between late 2006 and 2007 early. Accordingly, investors should not be worried about the bubble development of stock market for the upcoming time.

Additionally, the government will likely faster equitisation of state groups and corporations aiming to create more qualified commodities to the market. A lot of enterprises in Vietnam are at high potential with good basic indexes and their P/E ratio still stays at average level. Factually, in recent time, VinaCapital invested in about 10 local firms and its investment value has surged remarkably, Andy Ho revealed.

The bottom of financial crisis is over, so the stock market re-attracts the attention of foreign investors. Quoting Nguyen Xuan Minh-chair cum general director of Vietnam Asset Management Ltd (VAM), investors are negotiating with the fund to pour capital into Vietnam.

Louis Nguyen, chair of Saigon Asset Management (SAM) said that his firm is managing two funds listed on the German stock market. SAM is launching a new fund for private enterprises that are preparing equtisation and state businesses that are planning IPO.

Being as a newly emerging market, Vietnam has many disadvantages and investors some times had excessive reactions against the state's policies.

Giving optimism on the prospect of stock market, but Le Le Hang, analysis director of Saigon Securities Inc (SSI) was very cautious about her company's 2010 profit because prices of corporate shares (of the companies in SSI's investment portfolio
) surged strongly thanks to asset reappraisal and the earnings from material price difference. As for shares of these enterprises, investors need to consider long term risks. It is very hard to measure the real money flow to the stock market because brokerages allowed investors to use financial levers in securities investment.

At the seminar, Nguyen Doan Hung-vice head of State Securities Commission pointed out some measures have been carrying out in the next time, such as raising the foreign ownership cap in public companies and local brokerages to 49 percent. In addition, member funds will not limit the ownership ratio of foreign investors. From 2012, foreign investors will be allowed to own 100 percent of charter capital of securities companies.

Hung added, the government plans to remove tariff on profit transfer of foreigners to their homeland, and permit joint ventures and foreign wholly invested firms to transform into joint stock companies and issue and list shares on the stock market.