Experts warn of ambush by foreign investors

Posted: May 14, 2012 at 3:11 am

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Experts warn that foreign investors rising stake in the local stock market may lead to surprise takeovers at Vietnamese firms.

Last March, Nawaplastic Industries (Saraburi) a subsidiary of Thailands leading plastic product manufacturer Nawaplastic announced that it had become a major shareholder at both of Vietnams largest pipe producers.

According to data published by Vietnams stock exchanges, Nawaplastic Industries held 22.66 percent of outstanding shares in Hanoi-based Tien Phong Plastic JSC (NTP) as of March 15.

One week earlier, the Thai company also announced that it owned a 16.7 percent share of Binh Minh Plastic Joint Stock Co (BMP). The company ultimately plans to increase its holdings in both companies to 49 percent, the largest allowable foreign stake in a domestic firm.

Nawaplastic Industries has not always been forthcoming about its investment strategy. The Ho Chi Minh Stock Exchange said the company bought 3,200 BMP shares between March 19 and March 22 but did not make any announcements prior to trading even though as a major shareholder, it was required to do so.

Vietnams plastic pipe market is dominated by Tien Phong and Binh Minh.

Analysts said the increased stock holdings showed that Nawaplastic Industries, a supplier of materials for the two Vietnamese companies, wants to gain a foothold in the domestic market. Controlling the market through these two firms will be easier and cheaper than setting up its own business in Vietnam, they said.

Analysts said both NTP and BMP stocks were quite cheap at the beginning of the year, hovering around VND30,000. They have surged to around VND47,000.

Phan Dung Khanh, head of analysis at Kim Eng Securities, said many foreign companies began buying Vietnamese stocks silently in 2010, when prices fell to a low level. They only made these moves public after they had secured enough shares to join the management of the local company, he said.

Because the practice is legal, Khanh said local companies should take steps to protect themselves, noting that one way to do so is to seek a reliable partner as a major shareholder to avoid being infiltrated by unwanted investors or rivals.

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Experts warn of ambush by foreign investors

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Written by simmons |

May 14th, 2012 at 3:11 am

Posted in Thai Chi