Experts believe that the current gloomy stock market will become brighter if more investment funds enter Vietnam, calming down domestic investors and raising the securities demand. However, management companies seem to be continuing to wait for their time.
Twelve investment fund management companies were established in 2006. However, only the Hanoi Fund Management Company (HFM) announced the setting up of its VND200bil ($12.5mil) fund – Hanoi Fund. Other companies have not made any move.
The State Securities Commission (SSC) thinks that the best solution to the current gloomy stock market is to develop institutional investors, including investment funds. Meanwhile, only one fund, set up by Manulife, has got the approval from SSC to raise funds worth VND250bil ($15.62mil).
Experts guess that only several management companies will have their funds debut this year. HFM is preparing for the establishment of two new funds, the domestic one with VND500bil ($31.25mil) in capital, and the foreign one with the expected capital of $50-100mil. The funds will aim at both listed and unlisted securities and IPOs. Hanoi Fund, another fund managed by HFM, saw the net asset growth of 70% by the end of June 2007. The dividend HFM plans to give to the investors may reach 30% this year.
Another fund, to be managed by Viet Long Fund Management Company, is expected to be ‘given birth’ to in some days, and is believed to have the capital of VND300bil ($18.75mil).
According to Nguyen Thuc Vinh, Director General of Viet Long Fund Management Company, as the market keeps falling, investors have become hesitant with their investment deals. However, it would be quite different for investment funds, which always aim at long-term investment strategy.
“It is the right time to make disbursement now. I believe that the stock market will see vigorous development in the next five years,” said Mr Vinh.
Saigon Securities Incorporated (SSI) has just set up a fund management company; however, the company has been well preparing its plan to set up a fund. SSI has announced it will set up the fund right in 2007, but has not revealed the scale and the operational time.
Sources said that the Ban Viet Management Company was also moving ahead with its plan to establish a $150mil fund. The Vietnam Fund Management Company is raising funds to set up the VND300bil ($18.75mil) VF2.
Management companies are still trying to set up new funds, though they know well about the difficulties existing funds are facing. The price of VF1 certificate (being managed by the Vietnam Fund Management Company), for example, is now 20% lower than the net value asset NAV. The price of Prudential Management Company’s certificate is just around the face value, while Manulife fund management company is trying hard to raise funds.
Nevertheless, a lot of other management companies seem to be not hurrying with plans to set up funds. It is partially because of the market’s fall. Moreover, experts said, the strict regulations stipulated by the Securities Law have also prompted management companies to delay their plans on setting up funds. These companies now focus on doing business themselves, and doing authorised business.
Under the current regulations, two years after their establishment, management companies can establish member funds (minimum contributed capital VND50bil or $3.12mil, 50 members at least, capital contributors must be legal entities, state owned enterprises are not allowed to make capital contribution with state owned capital).
Source: VNE
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