Domestic and foreign investors at the Hồ Chí Minh Stock Exchange (Photo: tinnhanhchungkhoan.vn)Hanoi (VNS/VNA) - Vietnam’s equity market has been attracting trillionsof VND in investment capital via the flourish of equity funds.
As ofSeptember, the total number of funds operating on the market was 52, including33 open funds, two closed funds, 10 member funds, six ETFs and one real estatefund. The total net asset value (NAV) managed by the funds is 43.86 trillionVND (1.9 billion USD).
Notably, thetotal exchange value of ETFs’ certificates in the first nine months of the yearamounted to 6.88 trillion VND, up 46.4 percent compared to the whole year of2019, of which four ETFs have successfully launched IPOs.
The numberof ETFs, open-ended funds and bond investment funds has soared over the years,but they vary significantly in total NAV.
The totalNAV of bond investment funds has grown to 16.62 trillion VND, accounting for79.14 percent of all funds’ NAV on the market. Bond funds have applied digitaltechnology, offering diversified products to attract investors, typicallyTechcombank's bond fund, IPAAM's bond fund, MB Capital and SSI Fund ManagementCompany Limited (SSIAM).
Thenewly-established ETFs have lured large investment capital, which createdpositive sentiment for the market. VFMVN30 ETF attracts capital flows fromThailand and the Republic of Korea, bringing its total NAV to 6 trillion VND.
InSeptember, CTBC Vietnam Equity Fund disbursed hundreds of billions of VND tobuy VFMVN Diamond ETF’s certificates.
CTBC VietnamEquity Fund was established on August 25 this year and is owned by CTBCInvestments, one of the leading asset management companies in Taiwan. DragonCapital is the advisor for this new fund. The fund's initial commitment capitalscale is 160 million USD, equivalent to about 3.7 trillion VND.
As for theSSIAM VNFIN LEAD ETF Fund, NAV has increased to 800-900 billion VND. MAFM VN30ETF Fund expects to raise NAV to 100-200 billion VND in the first phase, andincrease to 2 trillion VND within a year.
Foreigncapital
Foreigncapital is pouring into the Vietnamese stock market mainly through largeinvestment funds and ETFs, said Tran Thanh Tan, General Director of VietnamInvestment Fund Management JSC (VFM).
“Investingin an ETF is the simplest and fastest because these funds focus on the mosttransparent group of stocks on the market. The development of ETFs is a globaltrend, not only in Vietnam,” he said.
“ETFs act asthe bridges linking capital flows from large markets to potential targetmarkets,” said Do Bao Ngoc, Deputy General Director of the Vietnam ConstructionSecurities Joint Stock Company.
“This isalso an easy way for foreign investors to invest in the local market, theydon't have to open a direct account, transferring money and dealing with moreprocedures,” he said.
“Expertsacknowledged that foreign investors investing in funds recently meant to seekopportunities when Vietnam's stock market is upgraded from the frontier toemerging status in the near future.
“However,upgrading status is only one factor, the nature of the problem is that theVietnamese economy has great potential for development. Even during theCOVID-19 pandemic, Vietnam has gained investors’ confidence as the disease wassuccessfully controlled, the economy recovered quickly and the Government hadmany solutions to support the economy.”
According toSoh Jin Wook, Investment Director of Mirae Asset Vietnam Fund ManagementCompany, the increase in number and size of investment funds in Vietnamshowed the development of the financial market.
This year,many governments around the world have provided great liquidity for thefinancial system, he said.
Vietnam haddone the same thing to boost the economy, through which some of the liquidityflowed into the stock market, he said.
Investmentfirms were constantly exploring new opportunities, despite the difficultenvironment, which is one of the core aspects of the investment industry, hesaid.
Nguyen PhanDung, Deputy Director of SSIAM, said in recent years, the Vietnamese market hadattracted large capital via ETFs, PE funds and some active funds.
Dung saidmarket status upgrading did not greatly impact the market’s ability to attractforeign capital.
“Vietnam mayremain in frontier market status for a few more years before being upgraded toemerging status. Cash flow poured in frontier funds is not significant, thefactor driving the stock market up from the beginning of the second quarter ismainly cheap capital flows in the domestic market,” he said.
“Interestrates tend to decrease since the beginning of this year, whichstimulates the flow of savings into other investment channels, includingthe stock market as the second-best choice after real estate,” Dung said.
“Therefore,although foreign investors have been net sellers for many months now, the stockmarket is still stable and growing,” he said./.
VNA
