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Foreign fund executive keeps faith in local stock market
Despite a trading volume slump, the Vietnamese stock market still provides long-term opportunities, said Indochina Capital Vietnam CEO Peter Ryder in a television interview with Bloomberg Tuesday.
What is the biggest drag here for Vietnam? Is it really external or more domestic, like say, inflation that’s been bringing the stock market down?
Peter Ryder: Well I’d have to say that the problems that have befallen Vietnam since the beginning of the year are fundamentally internal.
They have certainly been exacerbated by what’s been happening globally.
But you put your finger on it, I think, quite appropriately; inflation is skyrocketing in Vietnam.
The May number was just released (3.9 percent) just during the month of May which brings the year-on-year inflation to about 16 percent, I’m sorry the year to date inflation at 16 percent – year-on-year to 25 percent.
Plus the government has taken some major steps to control inflation, principally through macroeconomic policy.
Most observers believe, including ourselves, they will ultimately impact inflation and bring it down into single digits next year.
But I think for the remainder of this year it’s going to be tough sledding.
How much tough sledding? Are we expecting further declines in the stock market to record lows?
No, we’re not expecting it to go down that low at all.
But we don’t anticipate that the market is going to rebound tomorrow or next week.
We do, however, think that there are some interesting opportunities and interestingly, although volume itself is way off, I think average volume at this point in time is around 30 percent of what it was this time last year if not less.
Foreign buying has actually increased over the last few months as compared to last year.
So clearly there are people that do think that there are opportunities (select opportunities) in the market and they’re beginning to take advantage of that …
Are you taking advantage of that? Are you part of the foreign-investing market that’s been buying right now?
We’ve been nibbling at the market very selectively.
But, you know, we’re pretty much taking a wait-and-see attitude although again beginning to focus on a handful of companies where we think there’s true value.
Where is true value? What sectors, what industries and what names if you can name them?
Well I think the domestic consumption is still something we’re very strong on.
Transportation is another field that we like a lot.
So when are you going to get into these sectors? You said you’re in a wait-and-see mode, what do need to see in the markets and the economy before you start buying back in?
I think we’re going to need to see the beginnings of inflation coming under control.
I think we also need to see a banking system begin to function more effectively.
I mean, effectively in cracking down on inflation, the government has essentially taken banks out of the market as lenders and this is having a ripple effect throughout the economy.
It’s affecting property quite significantly, it’s definitely having an impact on corporate earnings, so I think that until you see inflation begin to come into reasonable range, and the banking system beginning to function again, I don’t think you’re going to see a whole lot of buying in this market.
So what is a reasonable range for inflation and what price in the barrel of oil do you think could bring inflation down to reasonable levels in Vietnam?
I think oil is definitely having an impact but don’t forget Vietnam is still petroleum self-sufficient so increase in oil prices helps exports in Vietnam.
The single biggest impact an inflation in Vietnam like, I believe, all of Asia, is food.
Food prices are up some 42 percent this year alone.
And so oil itself isn’t really the focus, food is.
How the government goes about, how the world goes about getting its arm around rising food prices is something that I’m certainly not qualified to comment on.
Thanhnien
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