Foreign Investment funds now also 'surfing' (Vietnam News)

Foreign investment funds now also ‘surfing’

13:42' 10/12/2009 (GMT+7)

VietNamNet Bridge – Foreign investment funds, generally considered to be long term investors, have been observed making ‘surfing investments’ inVietnam’s stock market, according to a report in Dau Tu Chung Khoan. A lot of investment funds have been set up over the last two years Though on average, trading by foreign investors on Vietnam’s stock market just accounts for just seven percent of the market’s volume, their moves have always attracted attention.  That’s because the foreign investors are mainly investment funds – reputed to be professional, experienced and only rarely money-losers. In two years, over 300 new foreign funds In the early part of this decade, the first years of Vietnam’s stock market, only a few investment funds were active in Vietnam, among them Vietnam Dragon Fund, VinaCapital and Mekong Capital.  Because then there were only a few dozen companies listed on the bourse, it was easy to guess what the investment funds purchased and what they sold. A lot of domestic investors followed the  funds’ lead, hoping for a bigger profit. As Vietnam’s stock market boomed, the number of foreign investment funds increased rapidly.  By 2007, there were 70, including Sumitomo Mitsui VN, Fullerton Vietnam Fund, Tong Yang VN, Maxford Growth - VN Focus, Vietnam Resource Investments (VRI) and Credit Agricole Fund, which mostly came from Japan, South Korea, Singapore and Malaysia. The rapidly growing stock market prompted fund management companies to set up more funds. Dragon Capital, for example, added two more funds, VinaCapital spawned Vinaland and Jaccar launched three funds. According to the Ministry of Finance, by November 2009, Vietnam had had 46 fund management companies and 382 foreign investment funds. The figure is a five-fold increase over 2007. Foreign funds also dabble in short-term buys The investment strategies of new funds in Vietnam are not so clear yet. What is clear that there are some changes in the investment strategies of the longer-established funds. The director of a well known foreign fund in Vietnam, who requested anonymity, commented that in view of the big gap between the VN Index’s highs and lows, no investment institution will dedicate all its investment capital to a buy and hold strategy. The VN Index crested 1,000 in late 2007, only to plunge to 200 in early 2009.  It is now hovering around 500. Khong Van Minh, Director of the Jaccar Vietnam Fund, stresses that long term investment will remain the strategy of the fund.  However, in order to get adapted to Vietnam’s stock market’s conditions, investment funds will use part of their capital to make short term, profit-maximizing investments. The 382 investment funds make different moves on the market.  What they have in common is ample capital, which allows them to purchase shares continuously in many trading sessions and then sell shares in many trading sessions The managing director of the SAM Investment Fund says that “value investors” investors do not care if the market is rising or falling. They simply purchase shares when they find the prices reasonable.  He says that a reasonable range for the VN Index now is 500-550 points. VietNamNet/DTCK http://english.vietnamnet.vn/biz/200912/Foreign-investment-funds-now-also-‘surfing’-883488/