Chi Pham, vice director of VinaCapital, analysing the behaviour of FIIs at the conference said that Vietnam had attracted many foreign investors when the stock market was booming. However, these investors only and as expected waited for a rise in share prices and then sold off, which did not bring in the best investment. Currently, share prices are one third of the previous level, even prices of some share codes have slipped to below their real value. Chi Pham also said that although the global financial turmoil has affected Vietnam, indirectly, both FDI and FIIs have reduced their investments because they are waiting for the stock market to improve.

Andy Ho, managing director of VinaCapital's Vietnam Opportunity Fund (VOF) stated that the price to earnings (P/E) ratio of Vietnam one-year ago was 20-25 times which has come down to only 10 times. Now that the Vietnamese government has taken certain policy measures to increase liquidity in the market this is a good time for investment in the Vietnamese market and in 2009, investors will return to Vietnam, he was confident about that.

Don Lam, general director of VinaCapital spoke at a seminar held recently in Singapore that up to 30% of Chinese investors wanted to move their investments to Vietnam, proving that Vietnamese market still has presents opportunities for investors in general and financial investors in particular.

After being asked to reveal VOF's investment status, Andy Ho answered that at present VOPF's investments are better compared to some months ago. But, the economy has not showed real rallies so VOF is not increasing its investment.

Few shareholders of VinaCapital's Vietnam Infrastructure Fund (VNI) expressed optimism when VNI managing director William Lean's said that VNI plans to invest in power, road construction and infrastructure sector in Vietnam. If the electricity price is raised by 15-20% in 2009, revenue from energy sector will increase while production costs will decline thanks to more effective operation of power plants. Thus, the energy still is the priority sector for the government. William Lean also confirmed that VNI will not miss any investment opportunities in the telecom and infrastructure sector as they have high potentials.

At the conference, some investors wondered whether Vietnam could overcome difficulties when big import markets namely US and EU are limiting consumption due to the global financial turmoil. Ex-general director of Morgan Stanley in Asia Pacific, Andy Xie said that developed economies have posted a fall of 2-4% in growth, which will impact developing economies including Vietnam. Yet, Vietnam as well as newly emerging economies can minimise the impacts by boosting trade relations with other newly emerging economies instead of relying on developed countries.

Most participants at the conference agreed that 2009's CPI will be pulled down thanks to the credit loosening policies of Vietnamese government whereby businesses will be able to access bank loans more easily and investments will flourish in the next year.

Regarding the property market, number of successful transactions has come down. But last week, David Blackhall, vice managing director of VinaCapital (quoted from Reuters on November 4) confirmed that the company was raising US$400 million for a real estate fund. The capital amount will be invested in property assets with declining prices, such as real estate complex, hotels or apartment buildings.

He said that some institutional investors want to invest in Vietnam's realty sector but wanted to have a non-listed investment fund to avoid affects of the short-term market.

Property prices have dropped by 40-60% in Hanoi and HCM City. In such circumstances, incomplete projects (due to a number of reasons) now are attractive for investors, according to Tran Minh Hoang, chair of VinaCapital's Vietnam Real Estate Investment Co (VinaLand).

Not only VinaCapital, but also the real estate investment fund of UK's Prudential insurance company told Reuters that the fund will pump a part of the capital into Vietnam in next June in the assets with falling prices.

In November, Aseana Properties finished the purchase of 51% stake, worth US$27.6 million, in Hi-tech Health Park in HCM City. Hi-tech Health Park comprises of private hospitals, complex trade area, hotels, and houses with a total floor area of over one million square metres. Earlier, in July, Aseana had spent about US$18.03 million on buying back shares of Nam Long Co-a construction firm.

HCM City's housing market with the high class apartment building named Richland Hill (Hiep Phu Ward, Dist 9) had an initial capital of US$300 million invested by Hiep Phu Gia Co in conjunction with Thai Thinh Capital, Eastern Asia Commercial Joint Stock Bank (EAB), Colliers International Vietnam and others. The sample apartment of the project was introduced last month. The project is expected to finish by 2011.

Up to November 3, as reported by LCF Rothschild, the Net Asset Value (NAV) of Vietnam Property Holding was minus 7.6%, JSM Indochina up 7.6%, Asean Properties dipped 0.3% while that of VinaLand jumped 19.8%. These are testing times, Blackhall said, "we are appraising and surveying the market and will wait for a suitable time to invest, possibly next January". He expected that the transactions with high earnings will be attractive for adventurous investors.

The economy at present is better than what it was three months ago. I think that the real estate market will only decline a little and then surge again. This is the opportunity that investors could not get 12 months earlier, he emphasized.

Foreign investors do not have liquid cash any more while foreign banks are very cautious in property lending. Additionally, the prices of many real estate assets in US have slid to one tenth of Vietnam's, which have created more attractive opportunities, according to a fund owner.

LCF Rothschild stated that up to November 3, the year to date (YTD) return of funds joining Vietnamese market is minus 64.5%.

Chau Quang Vinh, vice chair of VinaGlobal Securities Co said that now is the good time to purchase property in Vietnam.

Thanh Nien - November 12, 2008