Are the foreign investors giddy about Vietnam again?

Are the foreign investors giddy about Vietnam again?

By Michael Mathes

HO CHI MINH CITY, Vietnam (DPA): Investors and brokers who
gathered round the Ho Chi Minh City Securities Trading Center
(STC) were all smiles last Thursday as Vietnam launched its
first-ever bourse and inched closer to international market
respectability.

One woman, Nguyen Thi Mai Thanh, was smiling more broadly than
most, and with good reason.

Mai Thanh is the diminutive and shrewd general manager of
Vietnam's leading privatized firm, Refrigeration Electrical
Engineering Corporation (REE).

As the poster child of communist-ruled Vietnam's equitization
campaign, REE has seen its value multiply roughly 16-fold since
Mai Thanh issued 160,000 shares at 10,000 dong (then 91 cents)
each in late 1993.

When trading begins sometime later this month (Mai Thanh
thinks it will start Monday but the State Securities Commission
says in the "near future"), Vietnam's savviest businesswoman's
dreams of listing her firm on a bourse will be realized.

"We've been waiting for this day for two years," Mai Thanh
purred in a courtyard behind the STC, site of the former
parliament of South Vietnam prior to communist victory in 1975.

So have a lot of people, including reform-minded leaders in
the Communist Party who for nearly a decade have pushed for a
bourse despite the conservative views of powerful hardline
factions.

Now, as more than one observer at the STC launch said, there
may be no turning back.

"My hope is that this will be one of the biggest top five
markets in Asia," said Jonathon Waugh, chief representative of
British stock brokerage company Jardine Fleming.

"With Vietnam's population size, work ethic, and intelligence,
that is achievable," he added.

Waugh is one of a handful of investors who have remained keen
on the nation since investor confidence plunged in the late
1990s.

Many gave up on Vietnam as the next Asian Tiger, with more
than a few getting burned along the way by bureaucratic
quicksand, invasive corruption, and Hanoi's penchant for
demanding investors do things its way.

Now, with a recently signed bilateral trade agreement (BTA)
with its former enemy the United States under its belt, and the
launch of a bourse, Vietnam is suddenly looking pretty once
again.

"That does not mean we are going to have waves of kamikaze
investors like in the early 1990s," said Peter Ryder, chairman of
the American Chamber of Commerce in Hanoi and a long-term
investor in Vietnam.

Ryder sees far more cautious optimism than displayed by the
"cowboy investors" who piled over each other into the country and
then beat a path to the exits just as quickly two years later.

Indeed, some foreign lawyers versed in Vietnam's propensity
for muddling through say the country is decades away from
attracting serious international investment attention.

But Ryder says there is reason to be hopeful, and even major
financial institutions -- many of whom took a beating here in the
90s and left millions of dollars poorer -- may wish to reconsider
Vietnam as a hot investment opportunity.

"The combination of the BTA and the stock market and the
enactment of the Enterprise Law which has spurred enormous growth
in the number of private companies is laying the foundation for a
recovery."

Ryder is banking on it, literally. His Hong Kong-based
merchant bank, Indochina Capital Corporation, announced on the
day of the bourse launch that it intends to start up a US$10
million fund to invest in companies listing on Vietnam's stock
exchange.

They'll have few choices at first. Only four privatized
companies, including REE, are so far licensed to list on the
fledgling exchange, reflecting the "active but cautious" take on
the bourse announced by the country's deputy prime minister at
the opening ceremony.

"I think it will take two or three years before we see a full-
fledged operational stock market", says Ryder's partner, Richmond
Mayo-Smith III, from his spotless new offices overlooking the
STC.

By then, Waugh concurs, rights issues and IPOs could be the
norm, turning the exchange from a flirtation with capitalism to a
bonafide avenue for raising much-needed capital for Vietnamese
companies.

REE's Mai Thanh believes about 50 companies could be on the
board by the end of the year, but only a half dozen of the 43
firms officials say are eligible for listing have expressed any
interest.

"There needs to be a few more REEs around," Mayo-Smith said.