International investors are buying the most Vietnamese stocks in five years, lured by Southeast Asia's cheapest valuations and government efforts to bolster economic growth. The benchmark index rose the most in Asia to a 27-month high on Thursday.
Overseas funds bought a net $253 million of Vietnamese stocks this year to May 29, the biggest year-to-date purchases since 2008, speculating corporate profits will grow for the first time since 2010 as inflation eases and borrowing costs decline, data compiled by Bloomberg show. More foreigners opened Vietnamese equity trading accounts in the first four months of this year than the whole of 2012, data from the Vietnam Securities Depository show.
Vietnam's VN Index (VNINDEX) has gained 26% this year, making it Southeast Asia's best performing benchmark gauge, as the central bank cut interest rates this month for an eighth time since the start of 2012 and the government approved the formation of a debt asset management company to soak up banks' bad loans that were hampering growth. Even after the rally, the MSCI Vietnam Index trades for 13.5 times projected 12-month earnings, 17% lower than the average ratio for the region's five biggest markets.
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