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Foreign investors found difficult to invest in Vietnamese stock market due to insufficient securities products, a senior official from Vietnam-focused financial institution with long-standing investment experience in Vietnam Dragon Capital has said.
The total capitalization of Vietnam’s stock market reaches about US$145 billion. Of the sum, foreign investors own USS35 billion and the rest room is about US$18 billion, Le Anh Tuan, Deputy General Director of Investment cum Head of Research Department of Dragon Capital, said at the recent seminar in Hanoi.
However, half of the remaining room is owned by five companies including Vingroup (US$7.2 billion), Vinamilk (US$1 billion), Novaland (US$0.6 billion), PetroVietnam Power Corp (US$0.5 billion), Tuan said.
He added that the 751 remaining listed companies have US$8.5 billion for foreign investors. Thus, the average room for foreign investors is US$11 million each company, resulting in difficulties for foreign investors.
The Dragon Capital’s representative emphasized on the imbalance of capital distribution for the economy. Good companies with low valuation have been out of room while Top 20 currently has the PE of 22.3, negatively affecting the capital mobilization cost.
Meanwhile, many other countries in the region have opened up their markets. That has resulted in the appearance of many securities products such as Non-Voting Depositary Receipt (NVDR).
According to Tuan, Thailand’s NVDR products have the same benefits as common shares with high transparency and transaction convenience. However, it creates opportunities for foreign investors to control the companies. But there has been no dispute between investors and the owners in Thailand’s NVDR market thus far.
The foreign investors bought NVDR although the company still has room. The only difference between ordinary shareholders and NVDR holders was the latter could not be involved in company decision-making.
Tuan proposed to use Thailand’s NVDR as the basement to adjust to Vietnam’s conditions and creating Vietnam’s NVDR, which can be piloted in some companies that are out of room with good management. In which, 15 per cent of NVDR will be issued in the first phase.
During the event themed “Enhancing Vietnam’s capital market accessibility”, co-organized by the Central Institute for Economic Management (CIEM) and the State Securities Commission (SSC), participants also discussed solutions to offer new securities products to diversify the stock market and attract investors, helping businesses mobilize capital for production and development.