Investors unfazed despite gloomy global forecast

At last week’s Vietnam Access Day, organized by Viet Capital Securities (VCSC) in Ho Chi Minh City, hundreds of foreign investors, speakers, and Vietnamese firms discussed the potential of the Vietnamese market for overseas capital flows in 2016. The emphasis of this year’s event is Vietnam’s resilience in spite of global headwinds, which have prompted international investors’ flight from emerging markets.

According to Aaron Batten, country economist at the Asian Development Bank, Vietnam was the only ASEAN country with an upward growth forecast in 2015, with its annual GDP rising by 6.68%. This is a clear sign of recovery for the Vietnamese economy, and this momentum is expected to continue in 2016 thanks to low inflation rates, a flexible foreign exchange policy, and rising credit demand, Vietnam will remain a bright spot with stable growth this year.

“Pro-growth policies such as the numerous free trade agreements-notably the Trans-Pacific Partnership-or the liberalization of equity and property markets will support Vietnam’s growth. This will boost foreign investments in the country as well as spur manufacturing and exports in 2016,” Batten forecast.

The economist nevertheless warned that Vietnam will need delicate balancing policies in 2016 to support growth and minimize significant risks, such as fiscal constraints, a decline in foreign reserves, and the snail’s pace process of state firms’ equitization.

Meanwhile, Michel Tosto, managing director of institutional sales and brokerage at Viet Capital Securities, told VIR that the turnout for Vietnam Access Day 2016 was higher than previous years, which reflects foreign investors’ continued interest in Vietnam Overseas attendees are particularly keen on fast-growing sectors such as consumer goods, retail, or online commerce thanks to Vietnam’s young population, growing middle class, and higher income levels.

Consumer-related sectors such as logistics have also enjoyed significant attention, according to Tosto.

“This year is expected to be quite stormy for global markets, as capital outflows from emerging and frontier markets will continue. This will undoubtedly affect Vietnam, and we cannot expect a great boom in foreign investment as a result. However, foreign investors in general are still optimistic about Vietnam, because its domestic growth and foreign exchange rates were much more stable in 2015 compared to other ASEAN countries,” he said.

Manager of PYN Elite Fund Petri Deryng noted that this is his third time attending Vietnam Access Day, and he has indeed seen increased interest from the overseas investment community in the Vietnamese market over the years.

His PYN Elite Fund, one of the largest overseas funds in Vietnam, net bought US$60 million worth of Vietnamese stocks last year, accounting for 44% of all foreign purchases in the Vietnamese stock market. Vietnamese stocks now take up 80% of the Finnish fund’s portfolio.

“As a fundamental investor, PYN Elite Fund prefers an ongoing commitment to the Vietnamese market rather than a one-off deal. With this strategy in mind, we usually prioritise stocks with long-term growth prospects and good potential for high revenue, such as consumer goods, retail, and real estate. This year, we’ll continue to select Vietnamese stocks that satisfy these requirements and expand our portfolio here,” Deryng told VIR.

The annual Vietnam Access Day is one of the largest forums for foreign investors with an interest in Vietnamese firms. The event is aimed at connecting overseas funds with leading Vietnamese firms, providing investors with a comprehensive insight into Vietnam as well as potential investment opportunities.