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New shares should be discounted – fund   2008-05-25 - Bloomberg

Vietnam’s government has few options other than to sell shares in state-owned companies at cheaper prices as portfolio flows into the country slow, a fund manager told investors in a monthly note.



Short-term portfolio investment into Vietnam has “dried up,” hurt by bearish sentiment over the health of Vietnam’s economy and the potential impact on corporate earnings, said DWS Vietnam Fund, which is managed by a unit of Deutsche Bank.

“Running out of options in the short term, to boost portfolio flows, the fund manager believes that the government will have to resume privatizing state-assets but this time at more attractive prices to readily attract buyers,” Deutsche Asset Management (Asia) Ltd. said this week in a note.

Vietnam’s State Securities Commission is encouraging companies to halt or delay planned share sales after recent offerings were poorly received.

The floor prices of past sales have been “very high,” State Securities Commission Vice Chairman Nguyen Doan Hung said in March.

Share sales expected in the next two years include Vietnam Bank for Industry and Trade (VietinBank), Bank for Investment and Development of Vietnam (BIDV) and Vietnam Airlines, Bradley Lalonde, Hanoi-based general director of BIDV-Vietnam Partners Investment Management Joint-Venture Co., said at a conference last month in Ho Chi Minh City.

Vietcombank shares

The floor price at which shares in Joint-Stock Commercial Bank for Foreign Trade of Vietnam were made available in a December auction was “inflated,” Vietnam Holding Ltd. said in a report last week, which noted that shares in the company, known as Vietcombank, have fallen since the auction by about a half.

“There’s a delicate balancing act under way,” said Spencer White, a director of Thien Viet Securities in HCMC.

“Ministries don’t want to be accused of selling assets too cheaply, but on the other hand the government is probably going to have to respond to this kind of market environment by being much more realistic about pricing.”

Vietnamese companies are having difficulty raising funding because of a falling stock market and very high borrowing costs in a tight credit market, Deutsche Asset Management said.

“A window of opportunities has opened,” Deutsche Asset Management said.

“Valuations have declined from the inflated levels last year to a level which is more in line with regional valuations.”

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