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alt="" width="20" height="1"> </td> <td bgcolor="#ffffff" width="475" valign="top"> <table border="0" cellspacing="0" cellpadding="5" align="right"> <tr> <td> <div align="right"><font face="times"> <script language="JavaScript"> function SendNews() { var SendNewsWin; var strURL = "https://web.archive.org/web/20030413211122/http://www.atimes.com/email.asp?pg=" + location.href; var strName = "SendNews"; SendNewsWin = window.open(strURL, strName, "alwaysRaised=1,menuber=0,toolbar=0,location=0,directories=0,personalbar=0,scrollbars=0,status=1,resizable=1,width=500,height=600"); } </script> <a href="javascript:SendNews();"> <img src="https://web.archive.org/web/20030413211122im_/http://www.atimes.com/images/email_icon.gif" border="0" height="40"></a> <a href="javascript:window.print()"><img src="https://web.archive.org/web/20030413211122im_/http://www.atimes.com/images/print_icon.gif" border="0" height="40"></a></font></div> </td> </tr> </table> <b> <font face="times" color="#6699CC" size="7"> Southeast Asia </font> </b> <br><br>  <script language="JAVASCRIPT">  </script> <noscript> <a href="https://web.archive.org/web/20030413211122/http://www.for-travel-reservations.com/banmanpro/banman.asp?ZoneID=58&Task=Click&Mode=HTML&PageID=7694" target="_new"> <img src="https://web.archive.org/web/20030413211122im_/http://www.for-travel-reservations.com/banmanpro/banman.asp?ZoneID=58&Task=Get&Mode=HTML&PageID=7694" width="468" height="60" border="0"></a> </noscript>  <br> <br> <font face="times"> <big> <b> VIETNAM: TAKING STOCK<br> Part 1: Listing toward the brighter side </b></big> <br>By Bradley Martin <br><br> HO CHI MINH CITY - All stock exchanges have their ups and downs, but until very recently the news from Vietnam's nascent securities market was mostly gloomy. Although the Securities Trading Center here had opened for business as of mid-2000, only five companies had been listed - fewer than the number of licensed brokerage companies. The exchange was open only three mornings a week - but that was more than enough time to take care of trading in a market where hordes of local would-be buyers found that there were almost no sellers. <br><br> Foreign investors had already reached or exceeded the legal 20 percent limit in most of the listed firms before the shares had gone public, so they couldn't buy even if sellers appeared. Foreign fund managers who had set up shop during the emerging markets boom of the first half of the 1990s had seen their hopes for speedy market development crumble. <br><br> In just the past few months, that picture has brightened in several particulars. Seven more formerly state-owned companies have listed their shares on the stock exchange. That brings the total to 12, with five more companies expected to list soon. Listings could reach perhaps as many as 25 or 30 by the end of this year, predicts Tran Quyet Thang, general director of Saigon Securities Inc. The State Securities Commission, manipulating daily up-and-down trading limits, has found a way to bring supply more in line with demand for local investors. Expansion to daily operation of the exchange is in the works. <br><br> Don't get carried away, though. Many barriers still confront the would-be foreign investor. Removing them will take time - time for both the largely unsophisticated local investors and the more than occasionally bogged-down government bureaucracy to move up their learning curves. Several specific problems are yet to be ironed out. Foreign investors say that tax regulations affecting gains from portfolio investment aren't completely clear yet. The prospective new company listings in the pipeline may not be enough to excite investors unless the authorities step up the pace of "equitization" (the preferred local term, rather than "privatization"). And the State Securities Commission's ways of adjusting securities supply and demand frighten some investors rather than reassuring them. <br><br> The consensus view among people in the financial industry here is that it probably will be not just months but years before the market matures. But already there is sufficient optimism that some early birds are taking a peek. "A few foreign fund managers have come and looked at the market," most of them representing large, global emerging markets funds, says Jonathon Waugh, deputy general manager of ACB Securities. "Most have left impressed with what they saw but feel that, for the moment, the market is too small and lacks diversity." <br><br> Among the factors impressing visitors, this is a country that experienced average annual gross domestic product (GDP) growth of 7 percent and export growth of 20 percent during the 1990s (current official GDP: US$35 billion). Although it is officially a communist country, many non-communist observers are reassured to note that a young, Russian-educated reformist, Long Duc Manh, took over the top Communist Party post last year. Vietnam recently drew an endorsement from the International Monetary Fund for the country's "continued track record of sound macroeconomic management" and for strides it has made toward structural reform. <br><br> Some foreign institutional investors already have money in Dublin-registered closed-end funds specializing in Vietnam. Unfortunately, most of the foreign funds set up in the first wave in the early '90s have disappointed their investors and managers. Their bets have generally failed to pay off and they either are in the process of liquidating or have given money back to their investors. <br><br> One fund-management firm, Dragon Capital, is considered successful. And although many of Dragon's original competitors in the fund-management business are opting out of the race, at least a couple of new entrants have appeared and hope to raise capital. The reviving interest makes Vietnam seem "quite similar to China in the early '90s", Dragon director Alex Pasikowski says. <br><br> Among the older group of fund managers, Finansa Group of Thailand, which runs a private-equity Vietnam fund, has changed its focus from foreign-invested companies to local listed firms, says its Ho Chi Minh City representative, Nguyen T Thu Thuy. Thuy acknowledges that the firm has its work cut out trying to buy enough shares to put its money to work. "Our mandate ends in 2004, and at this point we are winding down. We would like to see new funds," she says, "but raising money at this point is not very easy." <br><br> Regulations require that any foreign investor wishing to trade on the exchange must have a government-provided code first. This is not a cut-and-dried procedure. Finansa, for one, ran into a roadblock. Because it has the word "fund" in its name, the regulations require a "government" decision before it can be given an investor code. The State Securities Commission in Hanoi, unsure whether it has the power to make the government's ruling in such a case, sat on the Finansa application, sources say - so the company decided to apply again under a different name that doesn't include the word "fund". <br><br> Insurance companies, including branches of foreign life insurance companies that are incorporated locally, are seen as destined to become major investors in the Vietnamese market. <br><br> Although only on the scene for about two years, such life insurers as Prudential and American International Assurance (AIA) "have been extremely effective at bringing out capital in the private sector", says one banker. "They need a place to park all that money." Prudential Vietnam Assurance PLC has about 1,000 employees and 17,000 agents in the country and has attracted almost 370,000 customers. "We are in the stage of injecting more capital," says Takashi Fujii, Prudential's chief investment officer. Fujii's job is to place the firm's investment funds, but he laments that the stock market "is still primitive". <br><br> Rod Carakeet, general director of Bao Minh CNG Life Insurance Co Ltd, agrees. "I wouldn't see much happening until the stock market reaches a more viable level," he says. "The life companies are still largely in establishment mode and investing in their own growth. But funds will become available for wider development within a year or two and I just hope that the stock market has become more real by then." <br><br> <ul><li>Tomorrow: <b>For action, look over the counter</b></ul> <br> ((c)2002 Asia Times Online Ltd. All rights reserved. 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