New decree serves as magnet for foreign capital flow  The strong rise of the VN Index since late June is attributed to the high hopes of a new wave of foreign capital thanks to the new policy on no-limit foreign-ownership ratio in many business fields.   The VN Index is approaching the 600 point threshold, which shows investors’ excitement about the newly released Decree 60 which sets no limitation on foreign ownership ratios in some business fields. The government has surprised everyone with the decision to offer more room in Vietnamese companies to foreigners. Prior to that, investors heard from well informed circles that foreign ownership would be lifted to 49 percent or 60 percent only. An analyst commented that Vietnam was “too generous” when removing the cap on foreign ownership ratio. Meanwhile, the 40 percent limit is set in the Philippines, and 49 percent in Thailand. In ASEAN, except Singapore, Indonesia is the only country with the same ‘openness’ as Vietnam. Therefore, analysts believe the Vietnamese government’s daring step will help make the Vietnamese stock market become more attractive in foreign investors’ eyes. They will have opportunities to buy FPT, REE and Vinamilk shares, which they could not do in the past because there was no more room for foreign investors, if referring to the old regulations. Thirty-one companies were reported as having no more room for foreign investors and 10 others are going to run out of room. Most of them are profitable companies which make up 30 percent of the total market’s capitalization value. Enterprises still have to wait for ministries’ circulars to find which business fields are ‘conditional’ and ‘unconditional”. However, securities companies such as SSI, HSC and investment fund management companies will surely get benefits from the new policy, because they must not be ‘conditional’ business fields in which foreign ownership ratios are limited, according to the State Securities Commission (SSC) deputy chair Nguyen Thanh Long. Official reports all showed that foreign capital flow to Vietnam so far this year remains modest. Market Vectors Vietnam ETF, for example, had attracted $57 million worth of capital only by June 26, up by 50 percent compared with the same period last year. According to Dr Le Anh Tuan from Dragon Capital, the Vietnamese market is very small compared with neighboring countries, with $60 billion worth of market capitalization value and a P/E (price on earning) at 12x, or 30 percent lower than other regional markets. In such circumstances, calling for more foreign capital by lifting the limitations on foreign ownership ratio proves to be a wise move to scale up the stock market. NCDT