Vietnam stocks expected to hit 10-year high this year: experts

By VnExpress January 22, 2017 | 11:57 pm PT

A man looks at a display board showing stock market prices inside a brokerage. Photo by Reuters

The government could rake in $7 billion from selling off state-owned companies.

Vietnam's stock market could see money flooding in from overseas this year following the government’s efforts to speed up stake sales in state-owned enterprises, leading to growing number of listed companies.

The Ho Chi Minh City-based VN Index is forecast to increase by 12 percent this year to 745 points, the highest level in the past 10 years, according to the average estimates of 11 analysts surveyed by Bloomberg News.

The benchmark index hit an all-time high of 1,170.67 in March 2007 before a sharp sell-off in the wake of the global financial crisis.

The Vietnamese stock last year enjoyed one the best surges since the financial crisis in 2008, gaining 19 percent from the previous year.

According to the State Securities Commission, the index has outperformed other Southeast Asian markets to become the fastest growing market in the region in 2016 with market capitalization of about 55 percent of the country’s gross domestic product.

Vietnamese stocks are expected to continue to rise this year following the government’s efforts to sell stakes in state-owned enterprises and encourage more companies to go public.

The number of state-owned enterprises in Vietnam fell sharply from 6,000 in 2001 to around 700 by the end of 2016, according to official data.

In the latest privatization attempt, Prime Minister Nguyen Xuan Phuc last year strongly urged the government's investment arm the State Capital and Investment Corp. (SCIC) to continue selling stakes in 10 state-owned enterprises in a bid to boost the stock market and fund the country's widening budget deficit.

The companies include state-owned enterprises which are performing relatively well such as Vinamilk, the country’s largest listed firm, and beer giants Sabeco and Habeco.

As part of the plan to fully divest from Vinamilk, the SCIC managed to sell 5.4 percent of the public stake in the dairy firm last December after the government had given the green light by scrapping the long standing foreign-ownership cap on the stock, allowing foreign investors to own a 100 percent stake in the company.

It is estimated that the government could rake in more than $5 billion after the SCIC successfully divests from the 10 listed companies, which also include technology giant FPT and insurer Bao Minh.

Divestments are expected to soar to nearly $7 billion following share sales in Habeco and Sabeco.

Besides, a strengthening economy is expected to lure more investors back to the country’s stock market. The government has set an economic growth target of 6.7 percent this year, the fastest pace in 10 years.

> Vietnam's stock market on track to hit $100 billion by end of 2016

> Vietnam's stock market outperforms ASEAN rivals