09:02 | 22/01/2018 Finance - Banking
(VEN) - The Vietnamese stock market had recorded the fastest growth in the last 10 years, with the VN-Index reaching the 1,000 point threshold. Andy Ho, managing director and chief investment officer under VinaCapital talked about the Vietnamese stock market in an interview with Vietnam Economic News’ reporter Minh Long.
What do you think about the growth of the Vietnamese stock market in 2017?
The Vietnamese stock market had a very impressive year when the VN-Index increased by about 40 percent. Some large companies with capitalization of US$1 billion or more, such as VP Bank, Vincom Retail and Petrolimex were listed, providing additional options for investors.
Foreign investors poured more than US$1 billion in the Vietnamese stock market in 2017. The highlight of the market in 2017 was that the State Capital Investment Corporation (SCIC) sold 3.3 percent of its shares of Vinamilk to Jardine Cycle & Carrirage at a price, which was 20 percent higher than the market price. It contributed to increasing Vinamilk’s stock price and elevating the Vietnamese stock market.
The growth of the Vietnamese stock market in 2017 was considered unsustainable as prices of some blue chip stocks were pushed up. What do you think about this idea?
This is normal in many stock markets around the world. There will be times when the majority of stocks or only a group of blue chip stocks will increase its prices. In the US market, shares of major technology groups such as Facebook, Amazon, Apple, Netflix and Google have made big contributions to the growth of the market.
In general, if the company works well with steady profit growth and reasonable valuation, an increase in its stock price will be normal. However, the tastes of investors can change from time to time. They may prefer the blue chip group. In the eyes of investors, the uneven development of the market is an opportunity to buy more goods stocks and sell off the stocks that have grown so fast.
How do you see the progress and the state capital divestment itinerary of large corporations in 2017?
The state capital divestment itinerary of large corporations achieved remarkable success in 2017. If the itinerary maintains the current progress, investors will be more confident to participate in the Vietnamese stock market. It is important that the divestment must be kept on schedule according to the published plan.
State capital will be withdrawn from more than 400 enterprises by 2020. Will the divestment attract foreign investors and help the stock market grow better?
The equitization and divestment of state-owned enterprises will provide more opportunities for foreign investors to participate in the Vietnamese stock market. More and more listed companies will contribute to improving liquidity of the market, thereby further attracting large investors and increasing the market valuation. The sale of Vinamilk shares is a clear example.
How do you see the Vietnamese stock market in 2018?
It is difficult to forecast the VN-Index in 2018. However, with optimistic signals in 2016 and 2017, VinaCapital believes that the market will continue to grow in the next few years.
Vietnam is technically still classified as a frontier market by the Morgan Stanley Capital International (MSCI), but has been working on improving accessibility to foreign investors as it tries to get an upgrade to emerging market status. This will help the market grow in size and sustainability.
What should the government do to help the Vietnamese stock market attract more foreign capital and continue flourishing in 2018?
VinaCapital expects that the equitization and divestment of state-owned enterprises will be accelerated. Companies need to develop their plan and roadmap in detail, with specific opinions of relevant ministries, sectors and localities. In addition, the government should encourage companies to sell more shares in the first phase.
We also expect the government to facilitate the establishment of voluntary pension funds in order to channel long-term investment capital into the bond market and diversify the social security system. The emergence of pension funds will also help heighten the overall prestige of the Vietnamese capital market.