Is there a new South Korean investment wave in the stock market?

Samsung Securities and Caldera Pacific will become the second largest investor when they acquire a 40 percent stake in Dragon Capital fund management company.



According to an MPI (Ministry of Planning and Investment) report, there were 3,374 stake purchases and capital contribution deals made by foreign investors by the end of August, worth $3.5 billion, an increase of 101.3 percent compared with the same period last year.

Japan, Singapore and South Korea are three of the biggest foreign investors in Vietnam. While the Japanese are well known for the portfolio investments in Vietnamese businesses (Bank of Tokyo-Mitsubishi UFJ holds a 20 percent stake in VietinBank, Mizuho holds a 15 percent stake in Vietcombank and ANA a 8.7 percent stake in Vietnam Airlines), Singapore and South Korea are known for direct investment projects.

These include Samsung’s electronics and smartphone manufacturing projects and the five VSIP industrial zones developed by Sembcorp.

Analysts noted that South Korea is expected to become a big portfolio investor in Vietnam as well. Sources said Samsung Securities and Caldera Pacific, a private investment fund from Hong Kong, have acquired a 40 percent stake in Dragon Capital.

Dragon Capital is expected to establish many funds to call for capital from South Korea to invest in Vietnamese enterprises.

Analysts have every reason to predict a new portfolio investment wave from South Korea. Vietnam is an attractive market, especially when a number of state-owned enterprises will become equitized from now to 2020. The shares of large conglomerates will be put on sale, including Sabeco & Habeco (brewers), PVPower (electricity), PVOil (oil & gas), BIDV (bank) and Vinamilk (dairy producer).

There are many attractive business fields for South Korean investors to pour money, such as seaports, logistics, aviation and real estate.

South Korean investors are now facing problems with their investments in China because of political conflicts. Lotte nearly had to shut down its operation because of Chinese consumer reactions.

South Korean investors are now trying to look for new investment opportunities to disperse risks amid the worry about conflict with North Korea. Dispersing properties to other countries, including Vietnam, is what South Korea is doing.

The stock market is now attractive in foreign analysts’ eyes. Bloomberg reported that Vietnam is the only Asian market that has lured inflows every month this year.

With a series of new shares having entered the bourse, the market capitalization value of the Vietnamese stock market has increased by 37 percent this year.

Thomas Hugger from Asia Frontier Capital (Hong Kong) said that Vietnam attracts foreign investors thanks to interest rate reductions, FDI capital increase and reasonable prices for stocks.

Kim Chi / vietnamnet