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VN-Index forecast to keep recovery after Tet festival
The VN-Index would continue its recovery after a break during the upcoming Tet festival from February 6-12, many pundits forecasted.
The VN-Index, which measures the value of the Ho Chi Minh City Stock Exchange, dipped to a record low at 764.13 points on January 24. However, it started to rise from January 28 and skyrocketed to 859.62 points by the end of the February 1 trading session.
According to Huynh Anh Tuan, Director General of the SJC Securities Company, the market is likely to recover strongly after the Tet festival. He explained that the postponement of Initial Public Offerings (IPO) by many big companies will cut down choices of both domestic and foreign investment funds, urging them to pay attention to shares already listed on the market.
Foreign investors spent close to 600 billion VND on buying 6.2 million shares and fund certificates this week, a two-fold increase over the past week and a record high since early 2008.
The recovery of the market was also attributed to the fact that most of shares are “turning around their real prices”, said Tuan, adding that the price-earnings (P/E) ratio and the Earnings Per Shares (EPS) (the portion of a company’s profit allocated to each outstanding share of common stock) are at reasonable levels.
According to Tran Quoc Trieu, Deputy Head of the Foreign Brokerage Division of the SSI Securities Company, the flow of capital from the real estate market to the stock market is the main reason behind the recovery of the stock market.
Sharing the same view with Trieu, Director of Ho Chi Minh City-based branch of Bao Viet Securities Company Vo Huu Tuan said investing in stock at this time will have fewer risks than investing in real estate as the property market is developing “too hot”. Prices of land and houses in many areas have increased between 2-3 times in comparison with the same period last year.
Another factor leading to the recovery of the securities market is the revision of Instruction No 03 on loans for stock investment. Under the renewed instruction, the existing three-percent cap on a commercial bank’s total outstanding loan for securities investment would be replaced by a 15-20 percent cap against the bank's charter capital.
VNA
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