HO CHI MINH CITY, Vietnam, May 29, 2013 /PRNewswire/ --
Further Market Gains Expected on Implementation of Additional Reforms
The move announced by the Vietnam Government to create an Asset Management Company is a highly positive development for the country's investment outlook said Mr Kevin Snowball, CEO of PXP Vietnam Asset Management ("PXP") (http://www.pxpam.com) in Ho Chi Minh City today. In addition to other planned reforms, the Vietnam stock market now has the potential to see significant gains in the medium- to long-term.
"The creation of a national Asset Management Company (similar to a "bad bank") has happened later than originally scheduled and final details are still somewhat unclear. However, we feel that the extra time taken will enable the Vietnamese government to deliver a better considered, and more effective, long-term solution to the problem of non-performing loans. We expect the market to continue to react positively to the news as the path to a resumption of credit growth within the banking sector and resultant stimulation of GDP growth will be better defined," said Mr Snowball. Additional anticipated reforms include increased foreign-ownership limits, possibly through the creation of non-voting shares.
Snowball cited the benefits of structural changes already made, including the impact of switching monetary policy focus in 2011 from "growth above everything" to a platform of measures designed to achieve long-term economic stability. As specific examples of reform success, Vietnam's annualised rate of inflation fell from 23.2% in August 2011 to just 5.1% in August 2012, the VND/USD exchange rate stabilized and in 2012 Vietnam showed its first trade surplus since 1992. With the Government forecasting a 5.5% GDP growth for 2013, "investors can look to Vietnam with considerable confidence in 2013 and beyond" said Snowball.
The market will still face challenges according to PXP. A necessarily high interest rate regime contained the inflationary effects of several years of excessive credit growth but exacerbated problems within the banking system leading to a surge in bankruptcies, unsustainably high (and improperly recognised) levels of non-performing loans and GDP growth slowing from an average of 7% over the previous decade.
"Timely & effective implementation of reforms will turn optimism into confidence, allowing investors to focus on fundamentals for perhaps the first time in more than six years, whilst offering improved access to stocks on compelling valuations," concluded Snowball.
PXP Asset Management is Vietnam's first listed-equity specialist investment manager. Established in 2002, PXP is grounded in a fundamental, research-driven, bottom-up investment style. The firm has assets under management of close to US$115 million and employs 22 staff, with a 10-strong investment team including eight research analysts. PXP manages both open- and closed-ended funds and a segregated mandate and has a multi-year track record of index outperformance.
PXP Vietnam Fund, a London Stock Exchange listed closed-end fund (VNF LN) which PXP has been managing since launch on 31 December 2003, released its Interim Report on 22 May 2013 and this can be downloaded via http://www.pxpam.com.
Upon launch in July 2000 the Viet Nam Index had two listed stocks and a capitalisation of just US$35 million. In May 2013, Vietnam has two stock markets encompassing 705 stocks with a market capitalisation of some US$41 billion.
Kevin Snowball, CEO, PXP Vietnam Asset Management
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Andrew Sharpe, Managing Partner, SharpeLankester
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SOURCE PXP Vietnam Asset Management