Stocks more expensive, but remain attractive to foreign funds

Stocks more expensive, but remain attractive to foreign funds

Following a successful 2014, investment fund management companies are seeking capital to set up new funds in Vietnam.

Vuong Tuan Duong, deputy director of VOF, noted that in 2014 and early 2015, VOF has withdrawn very little capital from listed companies. It has only sold shares that had increased in price to get money to pour into other investment deals.

VOF, for example, sold 3.6 million Vinamilk’s shares and earned VND444 billion.

However, Vinamilk’s shares still make up 10.8 percent of the fund’s NAV (net asset value) estimated by July 31, 2014, remaining the biggest investment item with the value of $87.2 million.

Chris Freund, general director of Mekong Capital, noted that he still can see mant profitable well-managed businesses which could be great opportunities for Mekong Capital.

He said that the expected high credit growth rate and the low inflation rate in 2015 should lead to a good year.

Mekong Capital is planning to set up a new investment fund in 2015, to be called Mekong Enterprise Fund III (MEF III).

The company has received investors’ commitments to pour capital into MEF III which is expected to be larger than the three existing funds managed by Mekong Capital.

Meanwhile, Dragon Capital said it would continue holding shares with a high capitalization value, though some of them are no longer available for foreign investors and they are not likely to increase in price.

A senior executive of Dragon Capital noted that Vietnam’s stocks are no longer cheap, but remain more attractive than other Asian markets.

He said listed companies’ profits in 2015 are expected to increase by 11 percent, which means that the P/E index (price per earning) may reduce to 12.5, which is lower than other ASEAN markets and India. Thus, foreign investment funds are expected to pay higher attention to the Vietnamese market.

However, some analysts noted that it is still too early to say if it would be easier to call for capital this year and to set up large funds with capital of over $100-200 million.

The stock market will do well only if Vietnam has “good commodities” to sell, they said.

Dragon Capital’s general director Dominic Scriven noted that Vietnam should stimulate demand by putting profitable businesses, such as MobiFone (the largest mobile network in Vietnam), up for sale.