Investment funds remain active in Vietnamese stock market

Though the Vietnamese stock market has been recently affected adversely due to the coronavirus epidemic, many investment funds have been still increasing their portfolios with an expectation of gaining high returns in the time to come.

The fears of coronavirus have caused difficulties for the stock market.

Data from the Ho Chi Minh Stock Exchange showed that America LLC has so far increased purchase of Vietnamese shares with a specific focus on small and mid-cap stocks. The fund has bought 18,000 shares of Haiduong Mineral Processing JSC (KHD), increasing its shareholding in the company to 234,360 units, corresponding to a 7.18% stake.

It has also bought 40,800 shares of Hai An Transport & Stevedoring JSC (HAH), 4,540 shares of Binh Dinh Minerals Joint Stock Company (BMC) and 19,440 shares of Construction Investment Corporation 3-2 (C32), raising the holdings in the firms to 6.04%, 9.01% and 12.12%, respectively.

Other stocks also acquired by America LLC since the beginning of 2020 included DIC Investment & Trading Joint Stock Company (DIC), Hung Thinh Incons Joint Stock Company (HTN) and ACC Binh Duong Investment and Construction JSC (ACC).

KITMC Worldwide Vietnam RSP Balanced Fund, a member fund of Korean Investment Management (KIM), has also become a shareholder of An Gia Real Estate Investment and Development Corporation (AGG) after purchasing 300,000 AGG shares last month, increasing the ownership percentage in AGG to 0.4%.

The other two funds of KIM, which is known as one of Korea's leading fund management companies, are also holding a total of 6.67% of AGG. After the transaction, the KIM member funds have increased their holding in AGG to 5.3 million shares, equivalent to 7.07% of ownership.

AFC Vietnam Fund has recently also purchased 400 shares of Mechanics Construction & Foodstuff JSC, increasing the percentage stake to 647,053 units, equivalent to ownership rate of 6%.

At present, AFC is investing in 59 companies, holding only 4.9% of cash and cash equivalents. The most favored stock included industrial sector and consumer goods, accounting for 32.8% and 29.7% of the fund’s portfolio, respectively.

PVI Opportunity Investment Fund (POF) has recently also announced its purchase of 3.9 million shares of Vinaconex Power Development & Construction Investment JSC (VCP), becoming the VCP’s second largest shareholder after the Vietnam Construction and Import-Export Joint Stock Corporation (Vinaconex).

Market rebound expected

The fears of coronavirus have clouded prospects for the global economy and caused difficulties for the domestic stock market.

According to Saigon Securities Incorporation (SSI)'s research unit, if the disease was successfully contained in February, along with the less affected demand and production chain, the market could recover.

“In previous years, the beginning of the year was always a favorable period for the Vietnamese stock market, creating a push for the following months. In 2020, since there is none of this motivation, the stock market will need more time to accumulate,” SSI analysts said.

However, experts also expected that the newly-approved EU-Vietnam Free Trade Agreement (EVFTA) will help boost Vietnam’s economic growth, offsetting for damage due to the disease, and therefore result in improvement in the stock market.

According to Bao Viet Securities Company (BVSC), the EVFTA, which removes more than 99% of tariff lines, creates favorable conditions for the exports of Vietnamese key goods to the EU market, including textiles, footwear, agriculture, fishery and wood products.

In addition, by joining the EVFTA, Vietnam can become an attractive investment destination for foreign investors. A large amount of capital from EU businesses could be invested in Vietnam, helping to improve competitiveness and boost the domestic market, BVSC analysts said.