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Petrol price hike will benefit stock market
The petrol price hike should be seen as a good thing for the stock market in the long term, according to Nguyen Xuan Minh, General Director of the fund management company Vietnam Asset Management (VAM).
Right after the decision on the petrol price adjustment was announced, the stock market fell down dramatically. However, Minh believes that the fall was just a result of the knee-jerk reaction of investors. He affirms that the petrol price hike will benefit the stock market in the long term.
Adjusting the retail petrol price is necessary, and it is better done sooner than later as this can help settle the problems caused by petrol subsidisation and help the national economy develop in a healthier way.
Petrol price hikes and high inflation prove to be problems in all countries in the world, not only Vietnam. There is every reason to believe that Vietnam’s inflation will slow down and become more stable.
On the worries that the stock market may die of capital hunger as the State Bank of Vietnam is tightening monetary policies, Minh said that the number of accounts of domestic investors remains low, which shows that idle capital among the public remains big. Moreover, foreign portfolio investment flow to Vietnam will increase when the national economy develops well, and the exchange rate, trade balance and inflation rate become more stable. In fact, there are a lot of good share items on the stock market which are selling at attractive prices. The good share items have been catching the eyes of a lot of regional investment funds.
Minh said that VAM recently had meetings with potential investors in the Middle East and Europe, during which he found out that the investors are optimistic about Vietnam’s market, believing that the current difficulties are just temporary. Though having some worries about the latent bad debts incurred by some financial institutions and the low capability to pay bank debts of some companies, the investors still believe in the strong growth of the national economy as a whole.
Minh said that individual investors should make investment decisions after considering stock items thoroughly, rather than making investments by following others’ moves. Investors have different viewpoints and different goals when joining the market; therefore, they have different investment portfolios. In many cases, investors have to sell some share items for different reasons, and not because the share items are not good.
His strong suggestion is that investors inject money in three to five of the companies that they are most familiar with. Big international financial institutions, when making investments in a country, focus on 10-15 companies after they consider thousands of companies of the country.
In general, a share item is considered a good stock if it is a share of a good company and sold at a price lower than its actual value. Opportunities to buy good share items came when the stock market was gloomy several months ago.
VNN
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