StoxPlus, HOSE Release Report on Findings from the Review of Foreign Ownership Limits and from Foreign Investor Survey 2016
Since 2013, Vietnamese government and related bodies including State Securities Commission of Vietnam (“SSC”) has been actively taking measures to prepare for its Stock Market to be upgrade from Frontier Market to Emerging Market standard by Morgan Stanley Capital International (“MSCI”).
Contributing to these efforts, HOSE and StoxPlus have jointly conducted a survey to understand perspectives from foreign institutional investors about this matter and the feedback on the progress undertaking to promote Vietnam Stock market from Frontier Markets to Emerging Markets.
The Report has been prepared for the participants of our Vietnam International Investor Conference 2016 by StoxPlus and HOSE with the same topic on 4th November 2016 at the Exchange Tower of HOSE in HCMC.
The following are key findings of the Review
- Foreign investor ownership accounts for 18% (US$11.7bn) on HOSE, 12% (US$848mn) on HNX and 6% (US$303mn) on UPCOM. Upcoming opportunities for foreign investors will come not only from the FOL loosening but also from the ongoing divestment of State capital from public companies.
- Foreign Investors have the main exposure to “consumerism” companies which refers to any business serving the vast majority of Vietnamese population. On HOSE, foreign investors mostly invest in Healthcare/Pharmaceuticals (35.2%), Technology (32.6%) mainly FPT, Consumer Goods (31.1%), Retail (30.8%) and Insurance (27.6%), Securities/brokerage services (28.3%) and Insurance (27.6%).
- FOL loosening has been an important development policy for the promotion of Vietnam to an Emerging Market classification by MSCI: Foreign investors can now have opportunities to increase up to 100 percent of voting shares in a public company in Vietnam when companies changed their Foreign Ownership Limits (“FOL”) as allowed by Decree 60. After about 9 months of implementation, there have been 13 over more than 2000 public companies changed their FOL as allowed by Decree 60. At HOSE, there have been 6 companies changed their FOL and 10 companies planned to loosen FOL in their 2016 AGM‟s resolutions.
- Actual foreign ownership has increased by US$127mn for 13 companies in post-FOL implementation period to date. This amount represents 1.03% its marcap and 2.3% of the additional foreign room added from its renewed FOL.
Foreign Investor Views on FOL:
- FOL removal would be a very encouraging sign for foreign investors as almost half of our respondents would significantly increase their investment in Vietnam.
- Health Care, Food & Beverages, and Retail were the top three most awaited industries for FOL removal for foreign investors.
- Legal constraints is the main external reason discouraging companies from increasing FOL while the caution of being taken over through M&A is the main internal one.
This Report is part of the cooperation between StoxPlus and HOSE following the Memorandum of Understandings signed between two parties in June 2016.