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Prudential chief finds value in plummeting stock market
With the Ho Chi Minh Stock Exchange dropping 54 percent in value this year, Prudential Vietnam Fund Management Company’s acting general director says it offers opportunities.
Director Pham Ngoc Bich said that if investors did not buy heavily now, they would regret not taking advantage of the plunge in two years.
A Thanh Nien interview with Bich is excerpted below.
How have your fund’s investors reacted to the bearish market?
Pham Ngoc Bich: The market will surely bounce back.
I and my fund’s investors are in the market for the medium- and long-term, so its current fluctuations, which won’t last long, don’t make us nervous.
Share prices on the market are pretty low, offering gilt-edged investment opportunities.
I believe many investors will regret wasting the chance in two years if they don’t start to buy now.
We at Prudential don’t want to miss such great opportunities, so we plan to invest in the energy, oil, agriculture and food sectors.
Many investors believe Vietnam’s stock market is freefalling because it was overvalued. What is your opinion?
I agree with them.
Vietnam’s economy grew rapidly over the past three years, more than 8 percent per year.
The growth rate was boosted by foreign investments, which flooded the country after Vietnam became a member of the World Trade Organization.
Banks also fueled the growth, offering loans to investors to expand their businesses or invest in property.
Local lenders’ credit growth rate last year reached an average of more than 50 percent.
This helped prompt soaring inflation.
Banks’ interest rates, which are lower than inflation, also hurt the stock market.
Additionally, retail investors’ confidence is low.
Retail investors account for 70 percent of the total number of stock traders, so this is a real damper on the market.
Vietnam’s stock market is still small.
Its market capitalization last year remained below US$30 billion.
The amount decreased this year, making for a more vulnerable market.
Market liquidity is being drained sharply after the State Securities Commission cut the intraday share trading band to 2 percent.
Many investors said the trading limit of 5 percent should be restored to attract investors to the market. What do you think?
I think the stock market should be considered a super market, in which its operators should strive to attract as many shoppers as possible.
They shouldn’t impose high taxes, delay trading or make too many changes.
They, of course, still have to keep their eye on the market to make sure it will develop in accordance with the Securities Law.
Additionally, to help break the market’s slump, the government should delay the capital gains tax until the market recovers.
The market is affected by future factors, not only present ones.
Investors have stopped buying shares today because they are worried about worse inflation in the future.
But they would be more eager to buy today if they didn’t have to pay taxes.
What do you think about the government’s measures against inflation?
I think the government’s tightened monetary policies, which have been issued recently to battle inflation, are good.
They should be carried out until inflation slows.
Thanhnien
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