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VietNamNews

Foreign investors bullish on markets

Update: May, 03/2010 - 09:11

by Thuy Anh

Foreign investors were net buyers on the country's two stock exchanges in April, showing their rising confidence in Viet Nam's economy and investment opportunities in its stock market.

Dang Pham Minh Loan, director for investment of fund management company VinaCapital, pointed to the fact that the country's economic outlook is showing clearer signs with inflation and interest rates cooling, attracting foreign investors.

Louis Nguyen, chairman and CEO of the Saigon Asset Management Company (SAM), said: "we are about to see a big increase in the market by the year end."

"Based on recent annual shareholders' meetings which we attended, many companies appear to be performing better than forecast, and outstanding in some cases."

One of SAM's funds, the Vietnam Property Holding, has bought stakes in several listed property firms, including the NBB Investment Corporation (NBB) and Construction and Materials Trading Joint Stock Company (CNT).

Viet Nam, with a young population, increasing buying power and a number of emerging industries, offers opportunities at low valuations, according to experts.

Chris Freund, managing director of Mekong Capital — whose funds target private equity — said the long-term picture for the Vietnamese economy, especially the stock market, remained very positive.

"Well-managed companies will find ways to be successful in any environment. Mekong will continue to invest in and empower such companies to consistently create value.

"When we make an investment, we typically have a five-year time horizon and we focus on factors that we can influence, such as empowering our companies to build their management team in ways that will lead to faster net profit growth. But we observe that companies are performing very strongly so far in 2010.

"We recently received the March performance data from all our companies and many have been growing faster than they planned – and I believe this is probably true throughout the economy. On average, we expect our companies to achieve net profit growth of around 50 per cent in 2010."

Overseas investments

Though agriculture, commercial forestry and mining remain the major targets for Viet Nam's overseas investments, services like construction, running shopping centres and restaurants, investment consultancy and online gaming are also becoming popular avenues as almost 40 projects were licensed during the first four months of this year.

Nine of the projects are in the US, mostly in the real estate sector, with the investors taking advantage of the opportunities thrown up by the crisis there to acquire high-end hotels and office buildings at attractive prices.

Lilama is set to undertake a construction project in the United Arab Emirates, also creating an opportunity to export around 400 skilled workers.

Two major projects, each worth around US$40 million, are in Cambodia — the establishment of a branch of the Vietnam Agriculture and Rural Development Bank (Agribank) and a forestry project by the Duc Nhan Joint Stock Company.

Viettel, the military-owned telecom company, has seen profits soar after investing in the country, and is currently negotiating to buy a 60-per-cent stake in a Bangladeshi mobile phone network, Teletalk, and a 70-per-cent stake in Haiti's Teleco network.

The value of the two deals is estimated at $359 million.

Vietnamese companies concluded several memorandums of understanding last month with businesses in Myanmar in the areas of banking, telecom services and shopping malls operation.

Overseas investment from Vietnamese businesses reached a record $7.73 billion in 2009, with $6 billion going to Cambodia.

Office space surplus

There will be a spurt in the supply of office space in the second quarter in HCM City, with an expected 11 new buildings with 98,000 sq.m set to open then, according to a report released by property service provider Savills Vietnam.

In the first quarter, one new Grade B and seven new Grade C buildings opened as total supply increased by 5 per cent over the previous quarter.

HCM City has a total of 138 office buildings of all grades, with a total area of around 838,000sq.m.

District 1 accounts for 54 per cent while Tan Binh District, ranked second after District 1, 17 per cent.

The average rent across all grades and districts edged down by 3 per cent quarter-on-quarter and 11 per cent from a year ago to $30 per square metre.

The average occupancy rate remained stable at 89 per cent even though around 42,000sq.m of space was added to the market during the quarter.

However, the majority of office transactions involved small spaces of below 100sq.m. Grade B buildings were the most sought-after by both new entrants and existing tenants.

Half of the 315,000sq.m of new supply this year will come from three major projects — Vincom Tower, Bitexco Financial Tower and A&B Tower, all in District 1.

District 7 will become a new business hub, contributing around 250,000sq.m, or 20 per cent of all incremental supply. This would see it take second spot in the city in terms of supply behind District 1.

In the first two months, 35 foreign direct investment projects were licensed with a total capital of $325 million. Real estate accounted for nearly 60 per cent of the total amount. — VNS

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