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Market “now definitely cheap,” investment fund says
Last week’s slide by the stock market has made shares on the exchange inexpensive, a fund manager told clients in a monthly note.
The Ho Chi Minh Stock Exchange’s VN-Index lost 15.8 percent last week, including a 4.6 percent tumble on February 21, the biggest one-day decline since 2006.
Monday the measure gained 4.1 percent to 715.04, its largest one-day advance in more than a month.
The market slump has brought prices down to about 15 times projected 2008 earnings, PXP Vietnam Asset Management told investors in the Dublin-listed Vietnam Lotus Fund Ltd. in a note dated last Sunday.
The figure compares to a price/earnings ratio of about 20 as of the end of last year, said Kevin Snowball, a director of PXP Vietnam Asset Management.
“The market is now definitely cheap,” said the Vietnam Lotus Fund note, which was written by Snowball.
“It is time to begin to buy.”
The market decline last week was driven by domestic investors, while foreign investors were net buyers, the Vietnam News reported Monday.
The State Bank of Vietnam’s move to withdraw liquidity from the system through the sale of bills sparked last week’s sales, the Vietnam Investment Review reported Monday.
The State Bank of Vietnam this month told commercial banks in the country to buy VND20.3 trillion (US$1.3 billion) of bills, to be sold next month, according to a February 14 posting on the website of the central bank.
The move is an attempt to slow a year-on-year inflation rate that reached 14.1 percent last month, the highest since 1995.
“Stop panicking”
“If people would stop panicking and look at actual values, this market has significant upside,” said Snowball, in a telephone interview Monday from HCMC.
The VN-Index may rise to 1,000 by the end of the year, “predicated on the assumption that the government starts to get inflation under control,” he said.
Among companies listed on the Ho Chi Minh Stock Exchange, the Vietnam Lotus Fund’s biggest holdings are in Imexpharm Pharmaceutical Joint-Stock Co.; General Forwarding & Agency Joint-Stock Co., known as Gemadept; and Hau Giang Pharmaceutical Joint-Stock Co.
“We like Gemadept because they are well-positioned to take advantage of rising trade prospects, particularly with their involvement in deepwater port projects,” said Snowball.
Thanhnien
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