Financial analysts are predicting a “third wave of foreign indirect investment (FII)” as soon as the government opens the financial structure to international capital.

More public funds

To date there have been scores of investment funds, both local and foreign, operating in Vietnam. However, VF1 remains the only public fund that raises capital from the public to invest in the stock market. Most recently, Britain’s Prudential has also announced it would set up a public fund in Vietnam after the State Securities Commission (SSC) gives the green light to the insurer’s plan.

Many existing investment funds are moving ahead with their plans to set up second and third funds. However, these will be member funds only, not public funds. Experts have said that the fund managers prefer member funds because procedures for public funds are too complicated. And according to Do Song Hong, Deputy Director of the management company for VF1, it takes much more effort to manage a public fund. VF1, for example, has 3,000 investors, including 200 who each own 10 fund certificates only.

Newcomers: who are they?

The first FII wave in Vietnam came more than 10 years ago, in the 1990s when seven large investment funds came to Vietnam, bringing total capital of nearly $700mil. There were the Vietnam Lazard Fund, Templeton Vietnam and Beta Fund. All withdrew during the Asian financial crisis.

The second wave of FII kicked off in 2002 with Mekong Enterprise Fund, which has the total capital of $18.5mil. Since then, Vietnam has welcomed 10 others with total capital exceeding the $1bil. The newest is Vietnam Holdings, which brings $112mil, 60% of it Swiss.

Financial experts are now talking about the third wave of indirect investment to come to Vietnam once the Government allows foreign-owned fund management companies. A Swiss expert said that Vietnam has become more attractive in the eyes of the investors as the Government plans to “equitise”, or release from State control, large banks like Vietcombank and big companies like MobiFone and Vinaphone.

High expectations have been put on famous names, like British Amersham Industries Ltd, Hong Kong’s Arisaig, Singaporean Keppel Land and Japanese FA Stock. Investors have also been whispering about the possible appearance of big groups like Swiss Unique Capital Group and British Fidelity when the country officially opens its financial market.

Source: Tuoi tre