Thread: How to Invest in Vietnam!

How To Invest In Vietnam
By Martin Spring
March 3, 2007

Vietnam is attracting increasing – some would say "frantic" – interest from international investors, lifting its stock market by 144% last year.

Government finances are healthy, public indebtedness is low, foreign trade balances are positive, the savings rate is high and rising – providing strong economic foundations. But perhaps the most exciting thing about Vietnam for international investors is that the country has so much future growth potential.

Annual GDP per person is still only $790, compared to Thailand's $3,420 and South Korea's $20,240. A survey made not long ago reported that semi-skilled workers cost only $73 a month to employ, compared to $375 in Thailand.

Although the stock market has exploded over the past year, reaching a market capitalization of about $14 billion now, it's still tiny compared to its regional neighbors.

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Also, the market recently has corrected after peaking on euphoria over World Trade Organization membership, and now seems to offer an opportunity for investors who are able to live with the risks to place their bets.

Although foreigners can buy Vietnamese stocks, it isn't easy.

Firstly, you can only do so by opening a custodian account at a Vietnamese bank. To do that, you must go to Vietnam in person to have your birth certificate and passport notarized at your embassy or consulate there.

Secondly, there's a limit on the proportion of the stock of a listed company that may be owned by foreigners – 49% generally and 30% in the case of banks.

Thirdly, you must leave your invested capital in the country for at least 12 months. However after that, it may be freely exported, as dividends can be.

According to a recent count, only a few hundred of the many thousands of custodian accounts were held by foreigners – most of them individuals.

It's likely to get easier for foreigners to invest as the government has set a target of having 1,200 listed companies by 2010, compared to about 150 now.

There are already several hundred companies that, although not listed, are trading on the informal OTC (over-the-counter) market. They are former state enterprises that have been privatized. According to stockbrokers Saigon Securities, they are mostly profitable.

As most listed companies have many thousands of shareholders, there is a remarkable degree of transparency and pressure to raise accounting standards.

The largest companies, either listed or OTC-traded, are: FPT, the biggest telecoms and infotech company, with a market cap of $2 billion; Vietnam Dairy Product, the No. 1 in its field; PetroVietnam, in oil exploration; Sacombank; Vinh Son Song Hinh Hydropower; Cables & Telecom; and the KinhDo bakery.

Unfortunately there are few single-country funds for individual foreign investors seeking a stake in this new tiger economy. The most reputable and successful seem to be the Dublin-listed investment trusts managed by Dragon Capital (Vietnam Enterprise Investments and Vietnam Growth) and by PXP Vietnam Asset Management (PXP Vietnam and Vietnam Emerging Equity). VinaCapital Investment Management has a similar trust, Vietnam Opportunity, listed in London.

Some of these funds tell you that they have high minimums, such as $100,000 or €100,000, but that is misleading. You can buy smaller stakes through stock exchanges, as I have done for family portfolios.

Major investment banks also offer participatory notes, certificates reflecting their own holdings of Vietnamese shares.

As the Vietnam story gains traction, we'll see new instruments introduced, but for now, this is how you play Vietnam.

Good investing,

Martin Spring

Hell I know Where I am headed to after the Dinar RV's!

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). It is the smallest stock exchange in Southeast Asia. The Vietnam stock exchange is both operated and regulated by the State Securities Commission.

More information about Vietnam Stock Exchange

Vietnamese Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

More information about Vietnamese Stock Brokers

Foreign Participation

Foreign ownership of shares in companies listed on the Ho Chi Minh City Stock Trading Center is limited to 49% of the company’s issued share capital. For bonds, foreign investors can hold 100% ownership of a particular issuer’s bonds.

Foreign investors who wish to purchase shares through the Ho Chi Minh City Stock Trading Center are required to register through a custodian licensed to hold securities on behalf of foreigners – of which there are currently three; The Hongkong and Shanghai Banking Corporation, Deutsche Bank AG and Standard Chartered Bank. Beside these three, securities companies can play role of custodian unit to hold stocks for foreigners as well. Once registered, a Securities Transaction Code is issued to the foreign investor who may then open a Trading Account with one or more of the twelve licensed Securities Companies.

How to Buy Vietnam Stocks

For private investors, it is necessary to fly to Ho Chi Minh City (Saigon) to open a securities account and a bank account. Foreigners are able to transfer funds out of Vietnam after fulfill tax obligations. There is no time constrain.

You may wish to contact Vietnamese stock brokerage firms on this list for more information.

Vietnamese Brokerage Firms List

1. Vietcombank Securities Co. (VCBS)

Chartered Capital: VND60 billion
Add: Vietcombank Building, 198 Tran Quang Khai Str., Hanoi
Tel: 84.4.8255503; Fax: 84.4.8255548
Business: Brokerage, portfolio management, underwriting, consultancy

2. Bank for Agriculture and Rural Development Securities Co. (Agriseco)

Chartered Capital: VND60 billion
Add: 4 Pham Ngoc Thach Str., Dong Da Dist., Hanoi
Business: Brokerage, dealing, portfolio management, underwriting, consultancy

3. Industrial & Commercial Bank Securities Co. (IBS)

Chartered Capital: VND55 billion
Add: 306 Ba Trieu Str. Hanoi
Tel: 84.4.9741054/9741055; Fax: 84.4.9433700; Email: [email protected]
Branch: 153 Ham Nghi, Dist. I, HCM City
Tel: 84.8.9140200; Fax: 84.8.9140201

4. Saigon Securities Incorporate (SSI)

Chartered Capital: VND20 billion
Add: 12 Nam Ky Khoi Nghia Str., HCM City
Tel: 84.8.8218567; Fax: 84.8.8294123; Email: [email protected]
Business: Brokerage, portfolio management, underwriting, consultancy.

5. Bao Viet Securities Co. (BVSC)

Chartered Capital: VND43 billion
Add: 94 Ba Trieu Str., Hanoi
Tel: 84.4.9433016; Fax: 84.4.9433012
Branch: 1 Nam Ky Khoi Nghia Str., Dist. I, HCM City
Tel: 84.8.8218565; Fax: 84.8.8218566

6. Bank for Investment and Development of Vietnam Securities Co. (BSC)

Chartered Capital: VND50 billion
Add: Tungshing Building, 2 Ngo Quyen Str., Hoan Kiem Dist., Hanoi
Tel: 84.4.8262959; Fax: 84.4.8262188
Branch: 146 Nguyen Cong Tru Str., Dist. I, HCM City
Tel: 84.8.8218508; Fax: 84.8.8218510; Website: BIDV Securities Company

7. Asia Commercial Bank Securities Co. (ACBS)

Chartered Capital: VND43 billion
Add: 442 Nguyen Thi Minh Khai Str., Dist. 3, HCM City
Tel: 84.8.8334085/8395179; Fax: 84.8.8399885/839988
Business: Brokerage, dealing, portfolio management, underwriting, consultancy

8. Thang Long Securities Co. (TSC)

Chartered Capital: VND9 billion
Add: 14 Ly Nam De Str., Hanoi
Tel: 84.4.7331349; Fax: 84.4.7233335;
Business: Brokerage, portfolio management, consultancy

9. First Securities Co. (FSC)

Chartered Capital: VND43 billion
Add: 99 National Road No. 13, Thu Dau Mot Town, Binh Duong Province
Tel: 84.650.832614/832615; Fax: 84.650.832616; Email: [email protected]

10. Mekong Securities Co. (MSC)

Chartered Capital: VND6 billion
Add: 2 Phan Chu Trinh Str., Hoan Kiem Dist., Hanoi
Tel: 84.4.9361389/90/91; Fax: 84.4.9361393; Email: [email protected], Website: http://www.mekongsecurities.com.vn

11. Haiphong Securities Co. (HSC)

Add: 24 Cu Chinh Lan, Hong Bang, Haiphong
Tel: 84.031.821405

12. Ho Chi Minh City Securities Co. (HSC)

Chartered Capital: VND50 billion
Add: 22-39 Pasteur, Commune Nguyen Thai Binh, District 1, Ho Chi Minh City
Tel: 84.8.9142121; Fax: 84.8.9144755; Email: Ho Chi Minh [email protected]
Business: Brokerage, portfolio management, consultancy, dealing, underwriting

13. Dong A Securities Co. (AESC)

Chartered Capital: VND21 billion
Business: Brokerage, portfolio management, consultancy, securities dealing