- Joined
- Jul 24, 2008
- Messages
- 33,627
- Points
- 0
http://www.bloomberg.com/apps/news?pid=20601109&sid=anydqs0cHZtc&pos=12
Vietnam Fails to Replicate China as Funds Sour on Volatility
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Yoolim Lee and Beth Thomas
March 25 (Bloomberg) -- Nguyen Thanh Trung brings Vietnam’s only privately owned plane level at 24,000 feet (7,315 meters) over the Central Highlands towns of Pleiku and Dalat before swinging right and bringing the eight-seat Beechcraft King Air 350 in for a smooth landing at Ho Chi Minh City airport.
Trung is familiar with the landscape: Thirty-five years ago he was a Viet Cong agent and fighter pilot who recalls dropping two bombs on the headquarters of the American-aligned southern regime in the city then known as Saigon, one of the last skirmishes before the end of his country’s civil war.
Today, Trung, 62, is on a mission that symbolizes his country’s transformation: He’s the personal pilot for Doan Nguyen Duc, an entrepreneur who is one of Vietnam’s richest men, Bloomberg Markets reports in its May issue.
Duc, 46, estimates that his empire, which includes Hoang Anh Gia Lai Joint-Stock Co., Vietnam’s biggest listed property company, gave him a personal wealth of 28.4 trillion dong ($1.48 billion) at the end of 2009.
“Duc owning a private jet is very good for Vietnam’s economy; it shows that Vietnamese people can also be successful like businessmen in other countries,” Trung says. “This is a time for dynamic entrepreneurs.”
Foreign investors in Vietnam -- a land that beckoned outsiders with great fanfare in the 1990s -- are having a bumpier ride than Duc and his pilot.
Roller Coaster
Indochina Capital Advisors Ltd. last year decided to liquidate a London-listed Vietnam equity fund that had lost 50 percent of its value. In November, San Francisco-based hedge fund company Passport Capital LLC demanded the return of uninvested cash from a fund that bought Vietnamese and Cambodian property.
The Ho Chi Minh City Stock Exchange’s benchmark VN Index, Asia’s best performer in 2006, plunged 66 percent in 2008 as inflation followed by global recession destroyed confidence in Vietnamese investments. The index rose 57 percent in 2009. It’s up 3.5 percent this year to March 24.
Investors who still have the stomach to stay in Vietnam are quietly bullish.
It’s still possible to make money in this land of 86 million people provided you’re willing to do homework, find the right opportunities and ignore the market froth, says Mark Mobius, chairman of Templeton Asset Management Ltd., which had $24 million of investments in the country as of February.
‘Real Value’
“Investors should see the real value of specific investments without being driven by pure sentiment,” Mobius says. “The private sector continues to grow and has become more important to the development of the economy.”
That new realism follows a decade of unbridled enthusiasm for Vietnam.
After the shift to a more market-oriented economy in 1986, foreign direct investment commitments in Vietnam went from zero to a peak of $60.3 billion in 2008, almost three times Vietnam’s foreign exchange reserves at the end of 2008.
Gross domestic product expanded at an average annual rate of 7.2 percent from 2000 to 2009, making Vietnam the fastest- growing economy in Asia after China and Cambodia, according to figures from the International Monetary Fund. The government forecasts GDP growth of 6.5 percent for 2010.
“Vietnam was viewed as the final frontier of Asia,” says Son Nam Nguyen, managing partner of Vietnam Capital Partners, who advised global investors on more than $30 billion in financing as the former head of Citigroup Inc.’s investment bank in Vietnam. “No one wanted to miss out on the next China.”
Inflation Peak
Instead, investors bought into a bubble as higher prices for commodities drove up the cost of living. Inflation peaked at 28.3 percent in August 2008. The central bank raised interest rates three times in 2008 to 14 percent to slow inflation.
Some investors grew tired of the roller coaster.
Shareholders of the Indochina Capital Vietnam equity fund in September voted to shut it down after its net asset value had plunged to $243 million by June 30, 2009, from an original value of $500 million in March 2007.
Passport Capital, which held a 13 percent stake in property fund JSM Indochina Capital Ltd., won shareholders’ backing to replace three of the London-listed fund’s directors and begin the return of uninvested cash.
From its inception in June 2007, JSM Indochina, listed on London’s Alternative Investment Market, had fallen 70 percent on Nov. 18, 2008. It was down 29 percent at the end of October 2009, when Passport called for shareholder action. Bill Nolan, managing director of sales and marketing at Passport Capital, declined to comment through a spokeswoman.
Lost Confidence
“Historically, because of bad experiences with inflation and currency depreciation, people are very quick to lose confidence,” says Manu Bhaskaran, a Singapore-based partner and head of economic research at Centennial Group Holdings, which provides advice on emerging markets. “The global financial system still has a risk of new shocks, and in that kind of context, countries like Vietnam are vulnerable.”
The volatility may slow Vietnam’s development as an equity market. Since Prime Minister Nguyen Tan Dung came to power in July 2006, the total number of companies listed on Vietnam’s two stock exchanges has increased more than 11-fold to 486 as of March 24 from 43.
Privatization Stalled
While Dung, 60, has said he welcomes more investment, he has yet to deliver on promises to privatize major state-owned companies, including Vietnam Airlines Corp.
Vietnam Fails to Replicate China as Funds Sour on Volatility
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Yoolim Lee and Beth Thomas
March 25 (Bloomberg) -- Nguyen Thanh Trung brings Vietnam’s only privately owned plane level at 24,000 feet (7,315 meters) over the Central Highlands towns of Pleiku and Dalat before swinging right and bringing the eight-seat Beechcraft King Air 350 in for a smooth landing at Ho Chi Minh City airport.
Trung is familiar with the landscape: Thirty-five years ago he was a Viet Cong agent and fighter pilot who recalls dropping two bombs on the headquarters of the American-aligned southern regime in the city then known as Saigon, one of the last skirmishes before the end of his country’s civil war.
Today, Trung, 62, is on a mission that symbolizes his country’s transformation: He’s the personal pilot for Doan Nguyen Duc, an entrepreneur who is one of Vietnam’s richest men, Bloomberg Markets reports in its May issue.
Duc, 46, estimates that his empire, which includes Hoang Anh Gia Lai Joint-Stock Co., Vietnam’s biggest listed property company, gave him a personal wealth of 28.4 trillion dong ($1.48 billion) at the end of 2009.
“Duc owning a private jet is very good for Vietnam’s economy; it shows that Vietnamese people can also be successful like businessmen in other countries,” Trung says. “This is a time for dynamic entrepreneurs.”
Foreign investors in Vietnam -- a land that beckoned outsiders with great fanfare in the 1990s -- are having a bumpier ride than Duc and his pilot.
Roller Coaster
Indochina Capital Advisors Ltd. last year decided to liquidate a London-listed Vietnam equity fund that had lost 50 percent of its value. In November, San Francisco-based hedge fund company Passport Capital LLC demanded the return of uninvested cash from a fund that bought Vietnamese and Cambodian property.
The Ho Chi Minh City Stock Exchange’s benchmark VN Index, Asia’s best performer in 2006, plunged 66 percent in 2008 as inflation followed by global recession destroyed confidence in Vietnamese investments. The index rose 57 percent in 2009. It’s up 3.5 percent this year to March 24.
Investors who still have the stomach to stay in Vietnam are quietly bullish.
It’s still possible to make money in this land of 86 million people provided you’re willing to do homework, find the right opportunities and ignore the market froth, says Mark Mobius, chairman of Templeton Asset Management Ltd., which had $24 million of investments in the country as of February.
‘Real Value’
“Investors should see the real value of specific investments without being driven by pure sentiment,” Mobius says. “The private sector continues to grow and has become more important to the development of the economy.”
That new realism follows a decade of unbridled enthusiasm for Vietnam.
After the shift to a more market-oriented economy in 1986, foreign direct investment commitments in Vietnam went from zero to a peak of $60.3 billion in 2008, almost three times Vietnam’s foreign exchange reserves at the end of 2008.
Gross domestic product expanded at an average annual rate of 7.2 percent from 2000 to 2009, making Vietnam the fastest- growing economy in Asia after China and Cambodia, according to figures from the International Monetary Fund. The government forecasts GDP growth of 6.5 percent for 2010.
“Vietnam was viewed as the final frontier of Asia,” says Son Nam Nguyen, managing partner of Vietnam Capital Partners, who advised global investors on more than $30 billion in financing as the former head of Citigroup Inc.’s investment bank in Vietnam. “No one wanted to miss out on the next China.”
Inflation Peak
Instead, investors bought into a bubble as higher prices for commodities drove up the cost of living. Inflation peaked at 28.3 percent in August 2008. The central bank raised interest rates three times in 2008 to 14 percent to slow inflation.
Some investors grew tired of the roller coaster.
Shareholders of the Indochina Capital Vietnam equity fund in September voted to shut it down after its net asset value had plunged to $243 million by June 30, 2009, from an original value of $500 million in March 2007.
Passport Capital, which held a 13 percent stake in property fund JSM Indochina Capital Ltd., won shareholders’ backing to replace three of the London-listed fund’s directors and begin the return of uninvested cash.
From its inception in June 2007, JSM Indochina, listed on London’s Alternative Investment Market, had fallen 70 percent on Nov. 18, 2008. It was down 29 percent at the end of October 2009, when Passport called for shareholder action. Bill Nolan, managing director of sales and marketing at Passport Capital, declined to comment through a spokeswoman.
Lost Confidence
“Historically, because of bad experiences with inflation and currency depreciation, people are very quick to lose confidence,” says Manu Bhaskaran, a Singapore-based partner and head of economic research at Centennial Group Holdings, which provides advice on emerging markets. “The global financial system still has a risk of new shocks, and in that kind of context, countries like Vietnam are vulnerable.”
The volatility may slow Vietnam’s development as an equity market. Since Prime Minister Nguyen Tan Dung came to power in July 2006, the total number of companies listed on Vietnam’s two stock exchanges has increased more than 11-fold to 486 as of March 24 from 43.
Privatization Stalled
While Dung, 60, has said he welcomes more investment, he has yet to deliver on promises to privatize major state-owned companies, including Vietnam Airlines Corp.
