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Talk of a possible Vietnam bailout is stirring excitement among foreign investors who predict a cash injection will increase the appeal of investing in the country's distressed assets.
A recent proposal suggesting Vietnam should tap international institutions such as the International Monetary Fund (IMF) for financial assistance may create an attractive business opportunity for foreign investors.
In particular distressed debt investors would be more attracted to Vietnam's non-performing assets as a bailout would help improve the borrower's ability to pay back debt.
"In such a scenario, the AMC (asset management company) comes in to restructure, and will find foreign investors to buy these assets at a discount depending on price. There will be buyers," according to an investment strategist based in Ho Chi Minh City. "I've spoken to distressed asset investors, and they say this is what they've been looking for, an opportunity like this. Some are on the sidelines and there are more to come."
The suggestion of the bailout came from an independent financial committee headed by former Vietnam central bank governor Nguyen Van Giau. It proposed the country should consider aid from an international organisation such as the IMF to help clean up bad debt or risk prolonged stagnation, according to a September 4 report cited by Bloomberg. The financial system needs an injection of VND250 trillion to VND300 trillion (US$14.4 billion), according to that report.
Purchasing distressed assets, which including banks' non-performing loans (NPLs), may spell out a decent opportunity for investors since Vietnam's growth is still intact.
"The growth story of the country is still there," according to Marc Djandji, Ho Chi Minh City-based vice president of investment analysis at Indochina Capital. "The manufacturing...