A few financial institutions are not optimistic about the Vietnamese stock market’s near-term future, but that hasn’t deterred droves of foreigners from opening trading accounts with a stockbroker. Right now, when the market is trending gently down, foreign retail and institutional investors have been busy buying up shares at what they consider bargain prices.
These days in Ho Chi Minh City there are lots of foreigners, some of them tourists, mingling with the locals at the offices of Saigon Securities, HCMC Securities, ACB Securities Co. and other stockbrokers.
Usually the tourists are there as part of an organized tour party, something that the travel companies only began doing recently.
Mr. Hieu is a regular tour guide who likes to take visitors to one or more of the city’s stockbrokers. “They want to familiarize themselves with the atmosphere of Vietnamese trading floors. Before coming to Viet Nam, they study our stock market thoroughly,” Hieu said.
“Some visitors even schedule a time to buy and sell shares, and some return to Viet Nam alone or with friends for a longer stay so that they can open a trading account and do lots of buying and selling,” he added.
“It would be hard to recognize them as tourists were it not for the presence of a tour guide accompanying them,” the broker said. “The way they study the market and trades, all the questions they ask, show that they really know their stuff.”
Vietnamese stockbrokers reckon that investors from countries with long-established stock markets can make more than enough money to pay for their trip if they just spend a short time speculating with Vietnamese shares, sort of straight in and straight out again.
Foreigners who interrupt their travels for a few quick trades are just one of the three groups that get involved in the Vietnamese stock market, the others being institutions and individuals who buy and hold with a view to making capital gains over time.
According to the State Securities Commission, there were 243,809 stock-trading accounts as of June 30, of which 5,568 holding shares, bonds and cash of US$5 billion were held by foreigners.
Retail investors accounted for nearly the entire lot - 5,353 to be precise - and Japanese people held 70 percent of these individual accounts.
If you visit a stockbroker on Ho Chi Minh City’s “Wall Street” (Nguyen Cong Tru) in District 1, places like Dong A (East Asia), Dai Viet, Phuong Dong, or Sai Gon Securities, on any weekday morning you’ll see large numbers of Japanese people talking shares, contemplating and quietly jotting down tidbits of information.
Akzumi from Japan is one such investor. “I learned about the Vietnamese stock market through Tokyo TV and other media in Japan. I flew here to study the market and decided to invest in Vietnamese shares for the long-term, at least five years," he said.
“I don’t care about the daily ups and downs of share prices or what the VN-Index is doing at any one point in time. What matters to me is the potential of Vietnamese companies.”
Why do foreigners choose Viet Nam even though some major institutions are not optimistic about the local stock market in the near or medium term?
Economist Le Hong Thanh, who teaches about shares and securities in general, gives four reasons why the Vietnamese stock market attracts foreign investors.
“Firstly, it’s a new market and many stocks with potential will be available, like banks and property developers. Secondly, Viet Nam joined the World Trade Organization, which demonstrates that the country is politically and economically stable. Thirdly, the country’s gross domestic product reached eight percent in the first half of the year, a rather impressive figure compared to other ASEAN countries. Fourthly, major foreign companies have invested in Viet Nam, making the market more exciting.”
For quite some time Vietnamese investors have watched foreign investors and noted what shares they buy and sell, then duly followed the foreign lead rather than rely on their own judgment.
Mr. Vinh is a local investor who was observing the action at Dai Viet Securities. “Foreign share traders are very experienced, so it’s better to follow them rather than trying to do the research on your own,” he said.
Another fan of shares, Mr. Quan, likes to do his own analysis and rely on his experience. “When I’m trying to decide what to buy, I rarely heed what foreign investors are doing. Still, when local investors follow them and rush to buy the same stocks, I too feel agitated,” Quan confessed.
Economist Thanh thinks it is essential to learn from foreign investors and what they practice but warns his compatriots to tread carefully.
“If local investors refuse to think for themselves, they can fall into a trap. Foreign investors have loads of money to play with and can move the market easily, and in a direction that can cost the naïve locals dearly,” he said.
“Therefore, when Vietnamese people decide to invest in shares long-term, they must take the initiative and analyze everything, become masters of price change, and make the most of the available information,” Thanh added.
Analysts say that having many foreign elements investing in the country’s stock market makes it more exciting, diversified and global in nature – like any true any stock market needs to be.
However, the biggest worry is that, in addition to the foreign investment funds, institutions and retail investors who seem to have long-term intentions and strategies, there are an increasing number of foreign speculators whose actions could destabilize and even wreak havoc on Viet Nam’s young stock market.
Source: VNE
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