Santa Clara University

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Company Specifics

Local Headquarters: Ho Chi Minh City, Vietnam
Homepage: www.vcbf.com
Employees: fewer than 50
Product/service: Domestic investment management
Customers: 50% domestic institutional clients, 50% international retail and institutional clients

 

Hosts

Mr. Clemens Burkart, Senior Portfolio Manager, VCBF (Vietcombank Fund Management)
Mr. Walter Blocker, AMCHAM Board Member and Entrepreneur

 

Overview

In February 2008, Franklin Templeton, a U.S.-based investment manager, entered into a joint venture with Vietcombank Fund Management, a local asset manager based in Ho Chi Minh City. Under the arrangement, Franklin owns a 49% stake, the maximum allowed for a foreign investor under Vietnamese law.

 

For Franklin, known for its conservative investment management approach, to enter the Vietnamese market is a signal that Vietnam is improving its transparency and corporate regulatory oversight, and foreign investors expect this to continue. As an emerging market with tremendous growth potential, Vietnam will continue to attract foreign investors, and in turn, infrastructure should improve. In the long term, so will the national standard of living.

 


In a press release, Franklin Templeton’s CEO mentioned Vietnam’s rising income levels, high growth GDP and increasing middle class affluence as reasons for entering into the joint venture. Other foreign investors who see the same trends have been rapidly entering the Vietnamese market since the country's entry into the World Trade Organization in 2007.

 

We were fortunate enough to hear from and share lunch with a panel made up of a senior portfolio manager and a younger Vietnam-born, US-educated analyst from Vietcombank Fund Management, as well as two other Western businessmen who make their homes in Ho Chi Minh City.
 

 

Key Takeaways

The 2008 Vietnam stock market plunge was not unprecedented
Like other emerging markets, Vietnam’s stock market is more volatile than those of developed countries. However, the Vietnamese stock market tends to have even higher highs and lower lows than its emerging market peers. We learned this high volatility level is due to a low level of national corporate oversight and financial transparency, which result in companies overstating the value of their assets without any repercussions. Earlier this decade, Vietnam's stock market suffered an equally large drop.

 

Over 20 years, real estate has been the strongest and most stable investment in Vietnam
Templeton entered the Vietnamese market in the 1990s, and quickly exited due to heavy losses from market volatility and lack of financial transparency. However, it held onto several buildings, which have appreciated at a strong and steady rate over the last 20 years. Real estate in Vietnam is much more stable than the stock market since it is a tangible asset in a country with rising income levels and national economic growth.

 

Although Vietnam has 85 million people, about 65 million are almost impossible to reach
When considering an investment or starting an enterprise in Vietnam, its large population of 85 million and its expanding income sound extremely appealing. However, 65 million of the residents live in the countryside, mainly farming rice and living at a subsistence level.  The market infrastructure currently does not reach these people. Most of the per capita income growth comes from the urban populations. Therefore, plans to open a business in Vietnam should assume a market of smaller than 20 million potential customers.
  
Posted by: S. Hooker

 
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Professor Toppel introduced the discussion panel, consisting of executives from a range of industries.

 


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The panel gave first-hand accounts of business struggles and successes in Vietnam.
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