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.