Illustrative image (Photo: VNA)
Hanoi (VNS/VNA) - As many stocks have plunged below their real value, foreign funds arecombing Vietnamese shares, raising fears that Vietnamese companies will beacquired by 'shark' investors.
Like many markets in the worldhit hard by the COVID-19 pandemic, Vietnamese shares have lost about 20 percent in value this year. Many stocks have seen their price hit historic lows,attracting large investment funds to buy shares in bulk.
The General Statistics Office (GSO)'s datashowed the value of foreign indirect investment, which includes capitalcontributions and equity purchases, in the first quarter of this year increasedto 2,523 transactions worth a total of 2 billion USD, compared to 1,653transactions in the same period last year.
The value of capitalcontributions and share purchases of foreign investors in the first quarter of2019 reached 5.69 billion USD but nearly 70 percent of this value was theconversion of debt into equity of Beerco Limited (ThaiBev's subsidiary in HongKong) to Vietnam Beverage Co Ltd.
The strongest trade occurred inMarch – the peak of the COVID-19 pandemic in Vietnam.
Big deals included JPMorganVietnam Opportunities Fund transferring 2 million shares of Military Bank (MBB)to Vietnam Growth Stock Income Mother Fund (worth about 34 billion VND) andNTAsian Emerging Leaders MasterFund transferring 1.3 million shares of MobileWorld Investment Joint Stock Company to Asian Smaller Companies Fund andVietnam Growth Stock Income Mother Fund.
On April 13, Aquila SPC Ltd (relatedto Dragon Capital) also transferred 420,000 MWG shares to Arisaig Asia ConsumerFund.
The PVI Opportunity InvestmentFund (POF) bought 3.9 million shares of Vinaconex Power Development &Construction Investment Joint Stock Company (VCP), raising its holding to 13.9million shares, or 24.39 percent.
On April 23, VinaCapital's fundgroup acquired 50,000 shares of Phuoc Hoa Rubber Joint Stock Company, stickerPHR on the Ho Chi Minh Stock Exchange (HOSE), increasing its ownership to 5 percent.
According to AFC Vietnam Fund,many stocks on the exchanges are undervalued compared to the corporate value,something rare in developed markets. Therefore, these stocks are veryattractive to major investors, including AFC Vietnam.
A representative of VinaCapitalInvestment Fund said they had a large amount of cash and were seekinginvestment opportunities when the price is right.
According to Phan Dung Khanh,investment director of Maybank Kim Eng Securities, there were opportunities toacquire businesses on the stock market because the stock price was very low.The important thing would be to choose which business at what price and when.
Le Dat Chi, deputy head ofBusiness Finance Department of University of Economics HCM City, said the crisiswas an opportunity for the acquirers.
"Many stocks have lost70-80 percent of their value and there is no reason for companies andinvestment funds with big money not to buy," Chi was quoted as saying onthe nld.com.vn.
This explained why a number ofbusinesses and members of the board of directors of companies recentlyregistered to buy back shares to not only invest but counter acquisitionattempts of rival businesses and investment funds, Chi said.
Preliminary statistics from thestock exchanges showed that as of April 10, members of the boards of directorsand internal shareholders of listed companies had registered to buy sharesworth up to 750 million USD, of which they successfully bought shares worth 455million USD. Companies have also registered to buy back shares worth up tothousands of billions of VND./.
