Vietnam Offers Foreign Investors with More Investment Products to Attract Money

Diep Nguyen

09:40 12/06/2019

BizLIVE -

Vietnam is expanding its product offerings by introducing covered warrants on the Ho Chi Minh City Stock Exchange in about two weeks.

Vietnam Offers Foreign Investors with More Investment Products to Attract Money
According to the latest article in Bloomberg, in a drive to continue attracting overseas investors, Vietnam is expanding its product offerings by introducing covered warrants on the Ho Chi Minh City Stock Exchange in about two weeks.
It is the latest step taken by Vietnamese authorities, who want to increase the market’s liquidity by appealing more to foreign funds. They previously lowered foreign-ownership limits for some industries, are working to speed up the process of reducing government stakes in companies and opened a derivatives market in 2017. They also announced the start of government bond future contracts trading next month and the government is overhauling its Securities Law.
The reforms are also aimed at helping Vietnam garner an MSCI Inc. upgrade to emerging-market status from its current frontier level.
The Ho Chi Minh City Stock Exchange, the country’s main bourse, plans to start covered warrants trading June 28, the State Securities Commission said last month. This will help diversify investment products in the stock market, provide tools to prevent risks for investors and boost foreign investment inflows, according to the market regulator.
The benchmark VN Index has gained 7.8% this year after falling 9.3% in 2018. The measure lost 2% in May, its biggest monthly loss since December as intensifying trade tensions hurt market sentiment. Foreign investors have bought a net of $343 million worth of Vietnamese shares this year through June 10, according to data compiled by Bloomberg. That’s compared with net foreign inflow of $1.8 billion in 2018 and $1.08 billion in 2017.
Still, local retail investors dominate stock trading in Vietnam.
Less than 10 securities firms have so far registered to issue covered warrants, including SSI Securities, VNDirect Securities and HSC Securities. Twenty-six stocks can be used as underlying equities for covered warrants, according to the Ho Chi Minh City bourse 
Forbes Reporter in April remarked that Vietnam appears to be Asia’s most interesting macro story and investment case this year. The country's ongoing economic reforms combined with recent geopolitical developments have certainly bolstered the country's outlook. 
The World Bank expects Vietnam to be among Asia’s fastest-growing economies this year, with the country's GDP growth rate forecast to reach 6.6%. And Vietnam's two stock market looks set to benefit further from a major potential catalyst for renewed interest if its equities are added to the widely followed MSCI Emerging Markets Index, which is both long overdue and seems like to happen by 2020, according to Mark Mobius, the veteran investor who earned the moniker: "father of emerging markets."

DIEP NGUYEN

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