Franklin Templeton bullish on Vietnam stocks

(VOV) - The Vietnam stock market has been rallying to news that the State Capital Investment Corp plans to divest its entire 45.1% stake in Vinamilk, valued at an estimated US$2.7 billion.

According to an October 14 posting on the government’s website, foreign portfolio investors will now be allowed to increase their stakes not only in Vinamilk but companies in other industries as well to as much as 100% from the prior cap of 49%.

In response, shares of the Ho Chi Minh based company jumped 4.7% at the close on October 19 to US$4.97 (111,000VND) per share, the highest level since the company’s trading debut in 2006.

“We welcome the move to expand the investment cap to 100% because the inflow of overseas investment will not just bring capital but also advanced management experience,” said Vinamilk Executive Director Bui Thi Huong in response to the news.

franklin templeton bullish on vietnam stocks hinh 0

The divestment decision is “terrific” and a “great move in the right direction,” said Chairman Mark Mobius of the Emerging-Markets Group at Franklin Templeton Investments in a recent interview.

“Liquidity in Vietnam equities is quite low, which is why the move away from the government is a giant step forward. We have quite a big holding in Vinamilk and we’d probably buy more at the right price."

Mobius revealed at a meeting in Ho Chi Minh City on October 19 that Franklin Templeton Investments would most likely invest US$3 billion into businesses (foreign and domestic) operating in Vietnam over the next five years.

We are particularly fond of the restaurant, service, tourism and logistics markets, he said.