In Vietnam, M&A capital inflows surged as a result of forecasts of declining USD interest rates and the "dominance" of foreign investors.

DNHN - Mr. Warrick Cleine, Chairman and General Director of KPMG in Vietnam and Cambodia, asserts that investors and the market are closely observing the Federal Reserve's actions regarding imminent USD interest rate decisions.

The possibility that the US Federal Reserve (Fed) will cease its series of interest rate hikes beginning next year is anticipated to have a positive effect on investment capital flows, according to financial analysts. FII (financial investment into Vietnam) via mergers and acquisitions (M&A) transactions.

Mr. Warrick Cleine, Chairman and General Director of KPMG in Vietnam and Cambodia, asserts that the market and investors are observing the Fed's interest rate fluctuations to anticipate their future actions regarding USD interest rates. A persistent escalation in USD interest rates will exert adverse effects on valuations and the worldwide economy, subsequently resonating with the domestic economy. Conversely, by stabilizing the dong exchange rate in particular, a reduction in USD interest rates can bolster confidence in economic development and stimulate indirect investment capital flows via M&A.

Additionally, Mr. Cleine mentioned that a worldwide trend is currently underway to lessen reliance on China. This enhances the confidence of investors in Vietnam's consumption.

KPMG Vietnam reports that during the initial ten months of 2023, the M&A market in Vietnam witnessed 265 transactions totaling over USD 4.4 billion in value, representing a 23% decline compared to the corresponding period in the previous year. This demonstrates a transition from monetary investments to capital-intensive strategic transactions.

Foreign investors dominated the top five M&A transactions in the first ten months of 2023, according to KPMG, with Japan, Singapore, and the United States accounting for the majority of the transactions' value (over 70%).

Mr. Khanh Vu, Deputy General Director of the VinaCapital Vietnam Opportunity Fund, underscored that Vietnam has emerged as an appealing investment destination in light of developments in the global economy and interest rate landscape. Vietnam, he noted, was the first market to implement a reduction in interest rates within the previous half-year.

Ms. Binh Le Vandekerckove, Founder and General Director of ASART, forecasted that the magnitude of Vietnam's M&A market could reach 20 billion USD within the next three years. She emphasized the significance of ESG considerations in ongoing and forthcoming M&A transactions.

"The M&A trend declined in 2012, but between 2016 and 2017, tens of billions of dollars poured into the Vietnamese market, including sixteen billion dollars in 2016." "Therefore, to increase the value of M&A transactions in the Vietnamese market, we must adopt a more profound and steadfast perspective," Ms. Binh Le explained.

In his concluding remarks, Mr. Cleine underscored the possibility that the prevalence of international investors in the M&A sector this year signifies a shift from opportunistic to strategic investment, with an emphasis on promising and robust industries.

"Compared to last year, financial services and healthcare have replaced the consumer and industrial sectors in terms of transaction value," according to Warrick Celine.

Binh Phuong