Obama visit will attract more US investors

US investors pay increasing attention to the local stock market. - Photo cafef.vn

 Trade co-operation between Viet Nam and the United States is undergoing positive evolution and will develop more with the Trans-Pacific Partnership Agreement (TPP), the Minister of Planning and Investment Nguyen Chi Dung told local media yesterday.

Local statistics reveal the United Sates is currently the largest export market for Viet Nam. In 2015, the value of Vietnamese exports to the United States reached US$33.48 billion, accounting for 20.6 per cent of total export value, an increase of 16.9 per cent compared with 2014. As a result, Viet Nam has become the biggest exporter to the United States within ASEAN.

According to experts, with TPP, the door to the US market will open even wider for local goods after taxes are reduced from 20 per cent to zero per cent, giving the country a huge advantage in competing with non-TPP rivals, such as China, India, Thailand and Bangladesh.

Textiles, footwear and seafood, shares of which have been increasingly listed on local exchanges, are among the key Vietnamese export products to the United States.

According to Saigon Securities Inc (SSI), US investors in the Vietnamese market often invest through their subsidiaries and affiliates based in other markets, such as the British Virgin Islands, Singapore, Hong Kong and other foreign countries. So current investment statistics do not fully reflect the real flow of US investment.

Since US investors have high standards for their projects, not only will the Vietnamese economy and society benefit, but also the environment, SSI said.

US investors have been present since the beginning of the local stock market in 2000, according to lists of foreign investors in the Viet Nam Securities Depository.

SSI has witnessed a growth in US investment in the local market. In 2009, the US-based Van Eck Fund established the VanEck Vectors Vietnam ETF to invest in Viet Nam. Currently, the fund is valued at over $340 million.

But the presence of US investors is still limited, due to geographical distance and the small-scale of Viet Nam's stock market, SSI said. The firm said large US management funds also have branches in Singapore and Hong Kong to invest in regional markets, allowing for indirect invest in the Vietnamese market.

The Managing Director of Mekong Capital, Chris Freund, told local media the fourth fund of Mekong Investment (MEF III) - which has $112 million in capital, including US capital - was just set up in Viet Nam this month, attracting the attention of US investors to the local market.

The country's stock market is changing, according to Chris Freund. To improve it, Viet Nam should further focus on transparency of information for US investors, so investors can better understand Vietnamese economic information, the investment environment, and the effectiveness of investment projects in a timely manner.

The managing director said the US president's visit sent a clear message to help US investors better identify opportunities in Viet Nam.

The general director of Maritime Securities Inc (MSI) Mac Quang Huy said Obama's visit would have a positive psychological impact on Viet Nam's stock market. The Vietnamese market had already recognised the positive signals, according to Huy. He also said the local stock market rallied after the previous US presidents' visits in 2000 and 2006.

"The TPP, which is part of the visit's agenda, will have a positive impact on textile stocks. In addition, some industries with potential co-operation agreements with the US, such as oil and gas, finance, and banking, will see their stock value rise in the market," Huy said.

According to securities experts, Viet Nam needs to improve transparency, expand the scale and quality of the market and listed companies, and promote the IPOs of large State-owned enterprises to make the local market more attractive to foreign investors, including US investors.

Viet Nam should also diversify investment instruments, create more flexible administrative procedures for foreign investors, and give them more access to locally-listed firms. This will raise international investor confidence in the Vietnamese stock market.