Has the Vietnam Stock Market Come of Age? (Part 2)
Has the Vietnam Stock Market Come of Age? (Part 1)
Discordant Notes for Private Equity
It would be unrealistic to indulge in unqualified optimism in the promotion of Vietnamese stock investment. Bureaucracy and the political establishment in Hanoi have not moved as decisively as in New Delhi or Beijing, so the country persists with business practices that would make global stock investors uncomfortable.
Inflation is another concern. Vietnam has wielded a firm fist in keeping its national dong down to keep its exports competitive. However, it has either neglected or been unable to keep prices of essential consumables under proper control for the domestic population. International balances of trade are not in favor of the local economy.
Foreigners are still prevented from owning controlling stocks in enterprises. Private equity players can find ways to wield influence in Board rooms, but there is hardly any corporate democracy to protect the rights and interests of small stock investors. This is even more discouraging in the nascent stock market environment of Vietnam.
However, it is the antiquated auction system of unloading government company stocks on the local stock exchange that is most off-putting. Investors have to pay deposits in order to make bids, and run risks of putting capital at stake with no stocks to show for it at the end of a bidding process!
No Second Spot in Competing for International Stock Investment!
India, China, and Malaysia are prime competitors of Vietnam in terms of attracting foreign investment. The stock market environment in all these countries are decades ahead of Vietnam, and lack none of its advantages and attractions. That is why Vietnam may remain an attractive labor source, and a supplier of some exotic fruits, until it gets the stock investment package together. The demands for funds from these competing nations are so compelling that Vietnam can expect no quarter when it comes to fighting for international capital. One should not lose sight of new stock investment opportunities in South Korea and Australia either.
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