Investing in Vietnam stocks- anybody have experiences?

[mokwit]

Seems to be very complicated to open and set up account and hidden 'gotchas' - would like the benefit of others experience so I come across fewer hidden issues

been in touch with three brokers - one required 3 copies of notarised passport, another requires only one but to repatriate your funds you have to physically go to the bank they use in VN. 3 rd broker seems to offer remote repatriation and one notarised passport copy.

What I REALLY NEED TO KNOW is how easy is it to repatriate your funds back out of VN (plus of course any other issues)

Also need to know what kind of spread % charged on currency conversion from USD to VND

Edited July 28, 2013 by mokwit

[Ducnguyen]

Few notes for you:

- the State Bank of Vietnam strictly controls the remittance of money out of Vietnam. In fact I have never seen any stricter rule anywhere in the world. The banks has to submit "clear evidence" of the purposes of the transaction to SBV before they let their clients remit the money out of Vietnam. The "Clear evidence" is sometimes in SBV's discretion. Rumour has it that this is because SBV does not have a big reserve of USD due to the inflation and bad economy in the last few years. Because of this, SBV has been trying to prevent people from converting VND to USD/EUR and remit them abroad. This however has been easier in the last few months so if you can find a good bank/broker who knows how to deal with this, it should be ok.

- If you bring cash or transfer USD into Vietnam, I remember there will be no charge on it. In fact the banks will welcome you transferring the money into the country. However, note that if you wire the money into the country, it will have to follow the FX rate regulated by the SBV and this is approx 1-2% cheaper than the (what the government calls it) "black market" FX rate - which is indeed the free market rate.

[yoshiwara]

Not particular to Vietnam but a good yardstick IMHO on investing in stocks is whether you can find a listing on the FT, the WSJ, Bloomberg, CNBC, Google Finance, Yahoo Finance. If you can find a listing and there is evidence of liquidity in the trading of that stock then fine, but if the stock is invisible then push away with a bargepole. For Vietnam why take the currency risks anyway when you can buy an ETF or investment trust from overseas?

[el jefe]

Agree with Yoshiwara -- VNM - http://www.vaneck.com/funds/VNM.aspx?redirectVE=generic

Not particular to Vietnam but a good yardstick IMHO on investing in stocks is whether you can find a listing on the FT, the WSJ, Bloomberg, CNBC, Google Finance, Yahoo Finance. If you can find a listing and there is evidence of liquidity in the trading of that stock then fine, but if the stock is invisible then push away with a bargepole. For Vietnam why take the currency risks anyway when you can buy an ETF or investment trust from overseas?

[WhiteCadillac]

Is there a way to invest in Vietnam using Thai brokers?

Either this:

Market Vectors Vietnam ETF.
NYSEARCA: VNM

or this

VinaCapital Vietnam Opportunity Fund Ltd ("VOF") is a closed-end fund trading on the London Stock Exchange’s Alternative Investment Market (AIM) (VOF.L). http://www.vinacapital.com/index.php?l1=85&l2=92&l3=93&l4=108

Edited February 18, 2014 by WhiteCadillac

[paz]

Few notes for you:

- the State Bank of Vietnam strictly controls the remittance of money out of Vietnam. In fact I have never seen any stricter rule anywhere in the world.

Sorry to hijack the thread. Argentina has stricter rules, no money is allowed to leave the country - period, unless it is a gov.t deal or industrial deal pre-approved by gov.t

Even when receiving money you have to justify why.

[WhiteCadillac]

Is there a way to invest in Vietnam using Thai brokers?

Either this:

Market Vectors Vietnam ETF.

NYSEARCA: VNM

or this

VinaCapital Vietnam Opportunity Fund Ltd ("VOF") is a closed-end fund trading on the London Stock Exchange’s Alternative Investment Market (AIM) (VOF.L). http://www.vinacapital.com/index.php?l1=85&l2=92&l3=93&l4=108

If there is no way to do in this Thailand - how about in Hong Kong?

[AyG]

If there is no way to do in this Thailand - how about in Hong Kong?

Most of the big stockbrokers in Hong Kong or Singapore can provide online access to major US and UK markets.

The two US securities shouldn't be a problem. However, VOF is traded on the AIM and may not be available. (I know that Saxo in Singapore can't trade it. I suspect that others are the same.)

TD Direct International (formerly Internaxx) in Luxembourg would definitely allow you to buy all three.

Just one point to look out for: what is the withholding tax rate on dividend income for US securities? With Saxo it's 30%, but with TD it's only 15%.

Personally, I keep my US ETFs and minor UK market securities in Luxembourg (despite the higher brokerage charges) and everything else in Singapore.

[paz]

Just one point to look out for: what is the withholding tax rate on dividend income for US securities? With Saxo it's 30%, but with TD it's only 15%.

That depends by your country of legal residence and its tax treaty with the US (if one exists). Your US broker must follow it.

[fatdrunkandstupid]

Not particular to Vietnam but a good yardstick IMHO on investing in stocks is whether you can find a listing on the FT, the WSJ, Bloomberg, CNBC, Google Finance, Yahoo Finance. If you can find a listing and there is evidence of liquidity in the trading of that stock then fine, but if the stock is invisible then push away with a bargepole. For Vietnam why take the currency risks anyway when you can buy an ETF or investment trust from overseas?

Good advice.

Two days before the (first) Bangkok shutdown, I emailed all of my friends in the States and Canada and told them to buy Ishares THD ETF.

Only one of them took my advice and he made 5.5 percent in three days.

[AyG]

Just one point to look out for: what is the withholding tax rate on dividend income for US securities? With Saxo it's 30%, but with TD it's only 15%.

That depends by your country of legal residence and its tax treaty with the US (if one exists). Your US broker must follow it.

Who mentioned a US broker?

Some international brokers take the trouble to deal with the petty, moronic regulations of Uncle Sam. Others can't be bothered. This makes the difference between 30% withholding tax and 15%.

[paz]

Just one point to look out for: what is the withholding tax rate on dividend income for US securities? With Saxo it's 30%, but with TD it's only 15%.

That depends by your country of legal residence and its tax treaty with the US (if one exists). Your US broker must follow it.

Who mentioned a US broker?

Some international brokers take the trouble to deal with the petty, moronic regulations of Uncle Sam. Others can't be bothered. This makes the difference between 30% withholding tax and 15%.

If it is dividend from an US security, even an non-US broker is responsible for complaing with the US law that you call "petty moronic". Failure to do could have their intermediaryu status revoked. They are also responsible to forward the correct W8-BEN form and the withholding tax to be applied correctly. You as a client have the right to be taxed correctly.

Edited February 21, 2014 by paz

[AyG]

Just one point to look out for: what is the withholding tax rate on dividend income for US securities? With Saxo it's 30%, but with TD it's only 15%.

That depends by your country of legal residence and its tax treaty with the US (if one exists). Your US broker must follow it.

Who mentioned a US broker?

Some international brokers take the trouble to deal with the petty, moronic regulations of Uncle Sam. Others can't be bothered. This makes the difference between 30% withholding tax and 15%.

If it is dividend from an US security, even an non-US broker is responsible for complaing with the US law that you call "petty moronic". Failure to do could have their intermediary status revoked. They are also responsible to forward the correct W8-BEN form and the withholding tax to be applied correctly. You as a client have the right to be taxed correctly.

Personally I don't see why I should be paying tax to America when I'm helping it by investing in its country. Unlike US residents, I get no personal benefit from the tax deducted. Whatever happened to "No taxation without representation"?

I also don't understand the need for two different rates of tax according to whether you've completed a W8-BEN form or not. It would be simpler for everybody if there were a single flat rate and no paperwork.

[Infinity7]

I would like to come back to the original question as I faced similar one. Here is my experience with brokers:

1) MayBank (former KimEng) uses Eximbank bank. To transfer USD out of Vietnam you would need to submit transfer order personally

2) VNDirect offers either to use either 2.1) their bank account to transfer money in and out online or 2.2) any other commercial bank (they don't recommend any)

So

1) is practically inconvenient for those living outside of Vietnam

What do you think about 2.1)? It looks less safe to use broker's account than my own account: It may be harder to prove that's my money

Would you recommend any bank for 2.2) which would allow to trasnfer USD out of Vietnam online?

[SanukDii]

Buy a fund that specialises in either SEA or Vietnam. There are a few. More liquidity, more diversification and no currency issues...that's the fund managers problem.

Sent from my SGP321 using Thaivisa Connect Thailand mobile app

[AyG]

I've just noticed that the Singapore Stock Exchange has a Vietnam ETF - DBX VIETNAM.

It's also listed in London, Hong Kong and a couple of other places.

[Infinity7]

Thanks, I just prefer to invest in particular stocks. Does anybody has a view on the question asked about the banks?

[AyG]

You may find the following link of relevance http://www.anz.com/resources/f/4/f432aa804a9aec808253fa415e15c706/REM-MATRIX-Personal-EN.pdf?MOD=AJPERES

[AyG]

1) MayBank (former KimEng) uses Eximbank bank. To transfer USD out of Vietnam you would need to submit transfer order personally

2) VNDirect offers either to use either 2.1) their bank account to transfer money in and out online or 2.2) any other commercial bank (they don't recommend any)

So

1) is practically inconvenient for those living outside of Vietnam

What do you think about 2.1)? It looks less safe to use broker's account than my own account: It may be harder to prove that's my money

I think there may be a misunderstanding. It's not the broker's own account. To open a securities trading account you also have to open a special type of bank account, used only for trading activities and paying related taxes, known as a "Capital Contribution" account with a bank. From the VNBank website "Foreign customers are not allowed to fund or obtain cash directly at VNDIRECT. Customers have to transfer money through a dedicated bank account." (Source: https://www.vndirect.com.vn/portal/tro-giup/hoi-dap-giao-dich-tien.shtml ).

More information on account opening at http://vninvestment.wordpress.com/brokerages/opening-vietnam-trading-account/

[Infinity7]

ANZ doesn't open accout remotelly, just checked with them.

They provide two options - in the first one I need to open my own account (which I would prefer, but cannot find a bank which would allow to transfer money out remotely), and in the second they use their own account (dedicated, Capital Contribution Account). Here is the description of their options:

From July 18th , 2011, to make it convenient for you in money transfer from overseas into Vietnam for Stock trading and vice versa, there are two options and you can choose ONLY one as follows:

1. Option 1: Transfer through a commercial bank:

1.1. Money transfer from overseas into Vietnam: Opening a Capital Contribution Account (CCA) at a Commercial bank (located within Vietnam boundary) which has the forex trading licence. Then, making interbank transfer from your personal overseas bank account into CCA. Next, using e-banking or interfax services (following your CCA bank instructions) to make a transaction to your securities account at VNDIRECT.

1.2. Money transfer overseas from Vietnam: Registering your CCA for online money transactions at VNDIRECT (registration form enclosed). Using VNDIRECT online money transactions to transfer the money from your securities account at VNDIRECT to your CCA. Then transfer money from your CCA to your overseas bank account following the bank instructions.

2. Option 2: Direct transfer to VNDIRECT:

2.1. Money transfer from overseas into Vietnam: Transferring directly from your overseas personal bank account to VNDIRECT CCA at Joint Stock commercial bank for Foreign Trade of Vietnam (Vietcombank - VCB) as follows:

Account No.: 0681 000 012 349

Bank: Vietcombank Head Office

Swift code: BFTV VNVX

Details: , Securities account No. at VNDIRECT, Securities account holder’s full name

2.2. Money transfer overseas from Vietnam: Registering your overseas personnal account for online money transactions at VNDIRECT (registration form enclosed). Using VNDIRECT online money transactions to transfer the money from your securities account at VNDIRECT to your registered overseas personal account. Providing VNDIRECT with an authorization letter (form enclosed) to work with the bank in exchanging Vietnam Dong into your foreign currency before making the transfer.

[mokwit]

I would like to come back to the original question as I faced similar one. Here is my experience with brokers:

1) MayBank (former KimEng) uses Eximbank bank. To transfer USD out of Vietnam you would need to submit transfer order personally

2) VNDirect offers either to use either 2.1) their bank account to transfer money in and out online or 2.2) any other commercial bank (they don't recommend any)

So

1) is practically inconvenient for those living outside of Vietnam

What do you think about 2.1)? It looks less safe to use broker's account than my own account: It may be harder to prove that's my money

Would you recommend any bank for 2.2) which would allow to trasnfer USD out of Vietnam online?

I opened an account with Saigon Securities primarily because the bank used is HSBC so I have more recourse if anything should get difficult. SSI have a standard form for remote repatriation via HSBC and assure me it works. Yet to fund it though - been meaning to make a test transfer to see how much gets eaten in fees - problem here is trying to get confirmation on which fees are fixed and become negligible on large amounts and which are a percentage in which case it could be a huge rip.

ETF/closed end not really right for me but agree easier solution for those who want country exposure.

Edited July 30, 2014 by mokwit