Besides the gradual ‘recovery’ of the official stock market, companies with initial public offering (IPO), unlisted firms and companies expanding business in the over-the-counter (OTC) market are attracting foreign investment funds.

Late August 2006, at an auction of 60,000 shares of the Mekophar pharmaceutical company, over half of the stock was taken by foreign investors at the average price of VND69,113 per share, and the highest price of VND75,500/share (starting price was VND50,000).

A total of 3,940 investors registered to buy 220 million shares of the Petroleum Technical Services Company (PTSC), which has chartered capital of nearly VND1,000 billion ($62.5 million), 5.9 times more than the volume of shares offered for sale (37.3 million). The amount of shares was the highest number ordered at an auction so far. The PTSC stocks were sold at the average price of VND37,256 per share.

Pham Uyen Nguyen, Executive Director of VinaCapital fund management company, said that unlisted joint-stock companies with a lot of capital like Mekophar and PTSC are very attractive to organisational investors.

A Vietnamese investor commented that with the participation of many more foreign investors, auctions have become hotter and prices have gone up, particularly at auctions of shares of companies with capital of VND50 billion ($3.125 million) and upwards.

VinaCapital has purchased 15% of shares in the Masan Industrial and Commercial Joint Stock Compay via the Vietnam Opportunity Fund (VOF). Don Lam, VinaCapital General Director, said that Masan is on the way of development and food processing is an area seeing the sort of high growth that the VOF is interested in.

Many people have said that companies with big capital, operating in fields with high growth rates like food, oil and gas, planning to expand production and business are the principal targets of foreign investment funds.

One of the reasons that make those firms attractive in the eyes of foreign investors is that in the official stock market, in the case of big companies like Sacombank and Vinamilk, the percentages of stock that foreign investors are allowed to hold have nearly reached the ceiling; thus seeking investment in unlisted potential companies is understandable. Moreover, for foreign investors with a huge amount of capital, seeking to buy large volumes of shares can help them more easily re-sell shares when they need money.

Just the overture

In mid-August 2006, Citigroup bought more than 20 kinds of listed shares in one trading session.

Dominic Scriven, Director of the Dragon Capital fund management company, said that this year Vietnam could attract around $500 million of indirect investment capital, equivalent to onethird of the total indirect foreign capital that the country has received so far.

However, the director of the securities trading company said that foreign investment funds still haven’t show strong moves. They have just opened accounts and observed.

“They are the overture of a song,” described Tran Hong Van, Deputy Director of the HCM City Securities Trading Company.

Source: SGTT