Merrill Lynch will not leave Vietnam

The recent report by Merrill Lynch did not reflect its long-term investment viewpoint, just its short-term investment outlook given the relationship between Vietnam’s market and other capital markets in the region, said Spencer White, an expert who once worked for Merrill Lynch.

Now the advisor to the Thien Viet Securities Company, Spencer White was once the head of the research team which wrote one of Merrill Lynch’s reports on Vietnam’s stock market, the one which was published in February 2006 that said Vietnam deserved to be a good investment address.

Mr Spencer talked with a Dau tu chung khoan reporter about the controversial latest report by Merrill Lynch, made by another research team of Merrill Lynch, which suggested reducing the investment level in Vietnam to zero. VietNamNet Bridge briefs the conversation.



Vietnamese investors are puzzled by the latest report by Merrill Lynch, which said that Vietnam is not a good investment address. What do you think about this?

My basic viewpoint on Vietnam’s stock market in terms of long-term investment has not changed since I wrote the report in February 2006. I believe that Vietnam is the top buy market for the next 10 years; it deserves to be one of the most attractive markets in Asia. Since I wrote the report, the VN Index has increased three fold, and the value of shares has also increased considerably.

The latest report by Merrill Lynch did not reflect its long-term investment viewpoint, just the short-term investment on the basis of the relationship between Vietnam and other capital markets in the region. Merrill Lynch’s experts think that in a couple of months, other capital markets, especially China, will see higher growth rates. However, the tendency may change as markets will change in the coming months.


Inexperienced individual investors have rushed to sell shares while foreign investors have been able to buy securities at low prices since the report was released. What would you say about the opinion that the report targeted inexperienced investors?

I can say that no Merrill Lynch report so far has been released to trick individual investors in any market, and Vietnam is not an exception. It would be a big mistake to think that Merrill Lynch’s experts have deliberately done something to influence individual Vietnamese investors. Though the share price has decreased since the report was released, I still have to say that the VN Index began falling down even before the release of the report, because Vietnam’s stock market is in its ‘correction’ period’.

After a long time of overheating, it is quite normal to see the market enter a correction period. The market will remain weak for some more time, but when positive signs of the market appear and listing companies announce their high growth rates, investors will come back to buy more shares.


Merrill Lynch said that it would move its investment capital in Vietnam to China. What do you think the possibility is that the company will leave Vietnam to head for China?

I’m not in the right position to answer the question on behalf of Merrill Lynch, but I think that Merrill Lynch will not leave Vietnam. Merrill Lynch has a long-term, serious investment strategy. I think you will see this in one or two years.

Merrill Lynch simply thinks that the Chinese market will be better than Vietnam in the coming months. The viewpoint will not affect big investment plans or the investment commitments in Vietnam Merrill Lynch has made.


The report has pointed out that the EPS in Vietnam is low, just 10% in 2007, the lowest level in the region, due to Vietnamese companies’ habit of issuing additional shares. What do you think about this?

It is understandable why companies like issuing more shares. By doing so, the companies can avoid paying interest on the capital they can get. However, the companies will have to pay a lot to use the capital, the EPS will be diluted, and the ROE will decrease. Most Vietnamese companies contact banks when they want capital, while there are many other tools they can use to get capital.

Source: VNE