VietNamNet Bridge – Will foreign portfolio investment (FPI) continue flowing to Vietnam in 2019 as it did in 2017 and 2018?
The biggest investment deal in 2017 was the sale of Sabeco’s shares to Thai investors worth $5 billion.
Meanwhile, Vinhomes and Techcombank had big deals in the first half of 2018. The total capital foreign investors injected into the two companies was estimated at $3.4 billion. In addition, Masan Group sold treasury stocks worth $500 million to an investor from South Korea.
Nevertheless, the upheavals in the international finance market caused the FPI capital to stall in the second half of 2018. The US FED raised the primary interest rate in 2018 four times.
The increased investment capital costs all over the globe stopped FPI flow to emerging markets. However, Vietnamese experts still believe that foreign capital will still arrive. Vietnam had record high GDP growth rate of 7.08 percent and low inflation of 3.54 percent in 2018.
The US FED’s interest rate policy in the time to come will depend on the market, rather than a fixed planned policy.
If the US Federal Resere FED stops the interest rate hike, this means that capital cost increases in the globe will cease. The reasonable capital costs would prompt investors to inject money into assets which promise higher profits in markets with higher risks.
However, Dong Ha, an analyst, in an article in Thoi Bao Kinh Te Sai Gon newspaper, said it was still early to say whether foreign investors would pour money into Vietnam in 2019.
A high number of foreign investors incurred losses investing in Vietnam’s businesses in 2017 and 2018. These included a 20-30 percent loss at Sabeco and Techcombank after a sharp fall in stock indexes.
An expert said that in current conditions, it would be better to think of the third scenario: foreign investors will consider the business performance of specific enterprises to decide whether to pour more capital into Vietnam.
He believes that businesses in banking, real estate, infrastructure and power will continue attracting investors’ attention. PVGas, Vietcombank, BIDV (the Bank for Investment and Development of Vietnam), Vietnam Airlines, PV Oil and PVPower are the most wanted shares this year.
In related news, Vietnam attracted $17 billion in foreign direct investment (FDI) commitments last year and disbursed FDI experienced a positive increase of 9.1 percent to $19.1 billion. Forbes named Vietnam the hottest investment destination in Asia.