Morgan Stanley forming Vietnam securities JV

Wall Street's Morgan Stanley said Monday it is forming a securities joint venture with Vietnam's State Capital Investment Corp., tapping a booming market that is expected to see a wave of equitizations.

The Hanoi-based joint venture, to be named SCIC Morgan Stanley Securities, will provide investment banking products such as M&A advisory and capital markets underwriting, equity and debt sales and trading, as well as research.
The venture will apply for domestic licenses and expects to begin operations in the fourth quarter.

The country's benchmark stock index jumped 144.5% in 2006 and is up more than 50% so far this year, powered in part by an influx of foreign funds chasing economic growth of 8-plus% and a population of 84 million with burgeoning spending power.

Global investment banks have been circling Vietnam in hopes of taking part in the country's surging capital markets activity. Last month, Credit Suisse and Deutsche Bank were chosen to advise as consultants to two Vietnamese banks on their equitizations this year.
Analysts expect strong growth of Vietnam's securities market over the next two years, thanks to substantial inflows of foreign direct and portfolio investment following the country's accession to the World Trade Organization (WTO).

The number of listed companies on the Ho Chi Minh City Securities Trading Center and Hanoi
Securities Trading Center surged to a combined 193 from 32 in 2006.
The total market capitalization of the two bourses rose 20 fold year-on-year to reach US$14 billion, or 22.7% of the country's GDP in 2006.

The State Securities Commission expects the stock market capitalization to jump to 30 to 40% of GDP by 2010.

State-owned SCIC, a strategic investment arm of the government of Vietnam, was created in mid-2005 to take capital ownership of the country's 5,000-plus state-run enterprises, which accounted for about 70% of the country's tax revenues.

SCIC can raise funds through issuing bonds and fund investment certificates. It is authorized to make direct and indirect investments domestically or abroad in any form or sectors.
Morgan Stanley will appoint the joint venture's chief executive, a source familiar with the tie-up said, while SCIC will name the firm's chairman. Both companies, along with staff, will hold equity stakes in the combined firm.

Source: Thanh Nien