foreign investors’ heads
Although foreign investor
transactions make up only about 10-20 per cent of daily stock market trades,
they have a huge influence on domestic investors’ psychology.
Viet Nam News spoke to Thomas Ngo, director of Indochina Capital, one of the
leading foreign funds in Viet Nam, to find out what drives the investment
decisions of foreign investors.
do you see the current state of the Vietnamese stock market?
The stock market is in an
early stage of development, and we should see the current development within the
big picture. We are very encouraged by the amazing development of Viet Nam’s
stock market in 2007 and very positive about it in 2008.
The ups and downs of the
market reflect many things: economic outlook, investor confidence, government
economic measures and global stock market trends.
have pledged measures to help develop the securities market. What do you think?
At this point, we fully
understand the Government’s caution about the stock market and the need to
balance its development with overall economic development. We believe that, in
the long run, the market will control and manage itself.
advantages do institutional investors and management funds have over individual
Experienced investors have
clearer, longer term perspectives. They look at the market strategically, using
numerous methodologies to analyse market trends and make decisions based on that
Individual investors are
easily influenced by a "sheep" mentality, driven by rumours and
short-term perspectives. But that’s changing. Don’t forget that the Viet Nam
stock market is only a couple of years old. Individual investors are learning,
and they are learning quickly.
watching the market, we see that foreign investors’ actions frequently run
counter to those of Vietnamese investors. For instance, domestic investors have
seen Government moves to support the market as positive signs and have bought
in, but foreign investors at the same time have tended to sell out? What gives
Again, we need to look at
the bigger picture. There are many things that influence foreign investor
decisions to buy in or sell out, not just Government actions. Their decisions
reflect an overall analysis by investors about market trends, and sometimes it
is a short-term business solution. And I can tell you, the decision is not
always right laughs.
investors tend to follow the big investors. What do you recommend?
My advice is: make your
own decision. The stock market has room for everybody. You need to set clear
investment objectives and use many tools to make your own decision. Look at what
the major investors are doing, but make your own decision.
institutional investors often wait for IPOs by major State-owned enterprises
but, when the IPOs roll around, they don’t bid all that much. The transaction
volume lags behind their financial capacity. Why is that?
There is big potential in
equitised State-owned enterprises, and we have been very encouraged by the
successes of past IPOs by the likes of Vinamilk and REE. Indochina Capital was
actively involved and secured equity in those SOEs. When looking at whether to
buy into an IPO, investors look at their potential, the market trends, corporate
governance and, most importantly, value-added things the company brings.
Investment volume reflects investors’ overall take on the value of that
particular SOE. — VNS