Share items with ‘little room’ remain attractive

Foreign investors are scrambling to purchase shares of companies in which the room for foreign investors is nearly run out, despite the fact that the PE indexes of these companies remain relatively high.

The information about the changes in foreign ownership ratio in AGF (down from 49% to 45%) after the issuance of additional shares has given foreign investors the opportunity to buy more AGF. The AGF purchased volume accounts for 50-80% of total transaction volume of this share item.

Similarly, after the foreign ownership ratio reduced as a result of the issuance of additional shares in order to raise the chartered capital to VND545bil, foreign investors rushed to buy SAM. Just several days ago, the mistake by a securities depository centre in defining the foreign ownership ratio in Sacombank has given foreign investors a gift: they could buy a lot of STB due to the mistake.

In fact, share items that foreign investors are rushing to buy are the ones of the companies operating in profitable fields, including banking (which has the impressive growth rate of 40-45% per annum), seafood (30%), real estate, seaports, infrastructure and telecommunications.

Though the PE indexes of these companies are relatively high, at 30-40, the share items remain attractive in the eyes of investors as the issuance companies all gain the growth rate of 30-40% per annum. Experts said that with the growth rate of 30-40% per annum, the acceptable PE index would be 30 or 40, since the price increases can be offset by the rapid growth rate in profit of the listing companies.

In fact, experts said that share prices had been decreasing considerably and were now at ‘acceptable’ levels. By the end of August, BT6 had lost 30% in value, GMD 42%, REE 32%, and STB 50% compared to their highest price levels.

Investors have thought that the demand for securities was very low in the ‘correction’ period of the market. However, what happened on the market showed the reverse result. The fact that foreign investors hunted for blue chips and the share items with little room showed that the investors’ interests in key share items remained very high.

To date, it remains unclear about the possibility of more room being offered to foreign investors. The Ministry of Planning and Investment is drawing up a decree on the implementation of WTO commitments in foreign direct investment. Once the decree is drawn up, the list of investment fields with investment limitations or preferences will be clearer.