Vietnam - Vietnam’s stock market to prosper in 2013: analysts

VietNamNet Bridge – Analysts all keep optimistic when giving predictions about the stock market performance in 2013 after several years of staying gloomy.

Bloomberg newswire has quoted PXP Vietnam Asset Management as saying that the VN Index, the indicator of the Vietnam’s stock market would increase by 33 percent in 2013.

Vietnam, the market which has witnessed the best increases in Asia since the beginning of the year, would continue its upward trend in the upcoming months. Though having increased by 16 percent so far this year, Vietnamese stocks are still much cheaper than that in many other regional markets, which is a convincing reason for investors to pour money into the stocks right now.

The VN Index dropped by 11 percent in the second and third quarter of 2012, when the Vietnam’s economic growth slowed down and some big bankers were arrested for the wrongdoings in economic management.

However, the index has bounced back after the State Bank cut down the interest rates and after the big economies in the world showed the recoveries, which was believed to help Vietnam boost exports which make up 80 percent of GDP.

The P/E (price on earning) of the Vietnamese stocks is now at 11.2, or 7.4 percent lower than the average P/E of the stocks in MSCI Frontier Emerging Markets Index designed for fledgling stock markets.

Kevin Snowball, Managing Director of PXP Vietnam Asset Management, said investors have just realized that Vietnamese stocks are now too cheap, and this is more noteworthy for them than the worry about the macroeconomic problems.

The businessman has noted that international foreign investors nowadays tend to accept higher risks in making investment.

The VN Index increased by 3.3 percent last week, reaching 483.42 points on January 30, the eight month high. The index increased by 16 percent last month, becoming the most sharpest increase index in Asia.

Vietnam’s macroeconomic conditions have seen great improvement in recent months thanks to the global economic recovery. After witnessing the decrease from $10.36 billion in December 2012 to $10.1 billion, Vietnam’s export turnover in January 2013 increased by 43 percent over the same period of the last year.

In 2012, Vietnam, for the first time, got trade surplus thanks to the excess of exports over imports, which has eased the worry about the short supply of dollars and the pressure on the dong/dollar exchange rate.

Thoi bai Kinh te Vietnam has also quoted some experts as saying that the stock market has escaped from the “confidence crisis zone” and that the confidence has been restored. What is happening in the stock market is the typical thing of the bull market in its early stage.

The VN Index has increased by 28 percent from its deepest low of 372.39 points on November 5, 2012.

The newspaper has reported that the stock market has revived so strongly that investors still rush to buy shares now, just some days before the long Tet holiday. Domestic investors, who have been encouraged by the big purchases from foreign investors, have poured big money into stocks.

According to Nguoi lao dong, in late 2012, when hearing good news about the recovery of the national economy, investors found out that businesses would not “die” and businesses’ situations were not as bad as they thought. Therefore, they began rushing to buy shares, thus leading to a new upward trend of the share price.

Investors have become so excited that they accepted to buy the shares which were in the dangers of getting delisted.

Meca Vneco (VES), for example, took a loss of 15.4 billion dong in 2012 for the third consecutive year. However, it stocks still have been hunted, which made the price soar from VND800 in early 2012 to VND1,300 in January 2013, or 62.5 percent.

Compiled by C. V

Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.