Vietnam stocks rose to an eight-month high after the State Securities Commission said it may increase the foreign-ownership cap on some companies.
The VN Index added 0.4 percent to 448.77 at the close in Ho Chi Minh City after the regulator said it plans to start a pilot program allowing overseas investors to own more than 49 percent of companies in some sectors. The gauge has surged 19.6 percent from its Nov. 2 low. An advance of 20 percent or more signals a bull market to some investors. Vietnam Dairy Products Joint-Stock Co. climbed 3.8 percent to 95,500 dong. FPT Corp. jumped 2.6 percent to 39,000 dong.
The VN Index has surged 8.5 percent this year, the most in Asia, after the central bank cut interest rates last month amid signs inflation is slowing. The measure slumped 23 percent from May through Nov. 2 as slowing growth hurt corporate earnings and arrests of banking officials fueled concerns about instability in the financial system. The government met last month to discuss forming a debt-asset management company to resolve bad bank loans. The dong has stabilized and the central bank aims to manage the currency flexibly in 2013, it said today.
“Market sentiment has improved a lot and optimism has returned as investors are comfortable with the progress the central bank is making to bring inflation down, stabilize the dong and restructure banks,” Pham Ngoc Bich, managing director of institutional sales at SSI Securities Services, said today. “The foreign ownership proposals definitely help.”
Overseas investors have been net buyers of the nation’s shares for six straight months, and foreigners have purchased a net $32 million of stocks so far this year, more than double the amount at the same time in 2012, according to data compiled by Bloomberg.
Changes to foreign ownership limits are subject to government approval and no timeframe has been set, according to Vu Bang, chairman of the regulator.
“We’ve submitted the plan to the Ministry of Finance and will continue working with the ministry on a report to the Prime Minister to classify businesses,” Bang said at a conference in Hanoi today.
The regulator also plans to widen stock trading bands on the country’s two exchanges from Jan. 15, according to Bang. The limit on daily share-price gains or losses may be increased to 7 percent from 5 percent on the Ho Chi Minh City Stock Exchange and to 10 percent from 7 percent on the Hanoi bourse, Bang said.
From Feb. 1, the authority wants to raise the margin-financing ratio limit to 50 percent, Bang said. A credit-rating agency will be introduced and pension-fund and bond-related products launched to boost trading, according to the regulator’s document. The commission has also proposed extending tax exemptions and reductions for stock trading for this year.
Masan Group Corp. climbed 4.6 percent to 115,000 dong. KKR & Co., the U.S. private-equity firm run by Henry Kravis and George Roberts, will more than double its stake in a unit of Masan Group to $359 million, its biggest investment in Southeast Asia, according to a statement today.
KKR will invest an additional $200 million in Masan Consumer Corp., a Vietnamese fish sauce maker, the largest private-equity deal in the country, betting that Vietnam’s young population and growing middle class will help it generate returns.
“Doubling our investment in less than two years demonstrates our strong conviction in Vietnam’s growth story,” Lu Ming, KKR’s regional head for Southeast Asia, said in a joint statement.