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Vietnam’s stocks cheapest in the world
Vietnam’s stock market has become the market with the cheapest commodities in the world. The VN Index currently stands at 378 points, much lower than its peak of 1,100 points.
Stock prices fall to deepest low
The electronic boards on securities trading floors have been lit up in green the last few days, showing the recovery of stock prices. However, the challenges of high inflation, the bad banking system’s operation and businesses’ lack of capital all still make investors hesitate to invest.
Don Lam, General Director of VinaCapital, an investment fund, said that one year ago, Vietnam’s stocks were the most expensive in the world, and nowadays, they are the cheapest.
Mr Don Lam has a point. Many share items now have market prices equal to the shares’ face value, while the average P/E is 7.8, very low if compared to when the market was at its peak in early 2007, at 40, which was much higher than the P/Es of other stock markets in the world.
Analysts say that it is now the right time to purchase good share items at low prices.
At a recent investment forum held in HCM City, Tony Tan, Managing Director of TC Capital investment fund, also said that it was time to purchase stocks, if investors can make wise deals.
VinaCapital sold half of its shares in late 2007, which helped it cut losses by 50%. And now the fund said that it has begun resuming investments with cautious steps. The share items the fund is eyeing are the ones of companies operating in the fields of consumer products, infrastructure and construction materials.
Mr Don Lam said that VinaCapital is preparing to set up two new funds, unlisted, which will raise funds from US Investors.
Looking at stock market with criticism
The VN Index has increased continuously in the last four trading sessions, reaching 384.71 points, while HASTC Index has reached 115.95 points after five consecutive trading sessions of rising.
However, whether VinaCapital can raise funds for Vietnam’s stock market remains a mystery.
An investor who wants to join Vietnam’s market will consider the risks of high inflation and high interest rates, which hurt businesses’ operations. Moreover, they will consider that the revenue from government bonds is now at two digits, and that the local currency is weak.
Despite the green electronic boards, investors who have suffered heavily from the market’s falls are not doing much right now, just waiting to see what will happen. Foreign investors’ purchases just account for 15% of total trade volume.
The analysis division under Thien Viet Securities Company announced that it still has doubts about the recovery of the stock market, as the banking sector remains weak, inflation has not been eased, while the capital in the market is not big enough to create any considerable stock price increase.
Investment funds, especially closed funds, are watching the stock market with hope. They think that the difficulties may exist until the end of the year, but will not prolong for 2-3 years.
With these arguments, they believe that it is now the right time to buy stocks.
VNN
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