Vietnam just indirectly influenced by world’s stock market

23/11/2007 00:00:00 - views: 3,781

In 10 continuous trading sessions, the market has clearly indicated the direction of discounting rather than ballooning, and the purchasing power has remarkably declined. The threshold of 1,000 point was always threatened while there was no bad news in the market. A number of investors reckoned that maybe this was resulted from the fluctuation of the world’s stock market and the price setting of foreign investors. Following here is a talk to Mr. Dominic Scriven, the CEO of Dragon Capital, a veteran and experienced investor in Vietnamese stock market (picture below).

Dear Sir, do the rise and fall of the world’s stock market impact on the domestic stock market?

Vietnam is just on the way of global economic integration, so it has not been possible to directly link in the cycles or the series of incidents happening in the overseas market. However, Vietnam does not directly but indirectly join the world’s market. So, in some aspect, Vietnam is still influenced. Moreover, Vietnamese stock market has enjoyed a positively rapid growth rate in the 2 recent years, which is partly contributed by foreign investors. Hence, the activities of foreign investors will more or less indirectly put impacts on Vietnamese stock market.

Could you please clarify those influences to Vietnamese stock market?

In my opinion, one big influence is that Vietnam is in the process of institutionalizing the financial activities in the market. For example, when talking about international capital, we have to imagine that 85 - 95% of the capital through international markets is in financial institutions and organizational investors. Whereas, the Vietnam’s stock market is established 100% by individual investors. Therefore, the original influence derived from foreign investors was the boost for the introduction of numerous domestic organizational investor. This is not meant that individual investors are not qualified, but organizational investors usually have a longer-term and more professional vision, which contributes to the sustainable development of the stock market.

In what way do such factors as the rise of the world’s oil price, the interest cutting of the United State Federal Reserve System, etc. influence the Vietnamese stock market?

As mentioned, Vietnamese stock market is just indirectly, not directly affected. The inflation index of Vietnam is partly based on food industry, which is influenced by the world’s market. Still, there has not been much concerns because Vietnam is protected as a small market which is not so developed as many other ones. As a result, Vietnamese stock market can hardly attract short-term capital, which is the very element that creates instabilities for the market.

So, in your point of view, which factors are he major ones that affect Vietnam’s stock market in recent years?

It is mainly due to domestic factors. One of the most important factors is the development of listing companies in Vietnam. In more details, it is the development of EPS. The second factor is derived from the management and policy planning phases. At present, Vietnam has already inacted Stock Law and has gradually implemented subprovisions, decrees and circulars. I think that this process is highly positive and necessary. Anyway, it still somewhat puts impacts on the market’s operation. And the influence from foreign investors is also taken into account but not the decisive one.
Many people believe that foreign investors have more experience, so it will be easier for them to set prices in Vietnamese stock market. What is your opinion?

In terms of the fact that many reckon that foreign investors rush into Vietnamese stock market to push up the prices, I suppose that any investor who wants to invest needs to calculate a profitable value, especially foreign investors since they all want to take part in the game in a long run with the swift and development of Vietnamese enterprises, not just  to buy today and to sell tomorrow. Perhaps a number of people think that when foreign investors set the prices for this enterprise at 20, that of another similar enterprise cheaper is unreasonable. In fact, we evaluate enterprises from the global angle and apply the world’s price framework to big enterprises in Vietnam.

From Saigon Liberation


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