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VN Index rising, but don’t expect strong recovery of market
The rise of the VN Index in recent trading sessions has brought good news to investors. However, they have been warned not to put high hopes on the strong recovery of the market in the immediate time as there exist uncertainties in both the world’s and the domestic markets.
Nguyen Viet Cuong, Deputy Managing Director of VinaCapital, said that the broader daily trading bands of +/-7% for Hanoi trade floor and +/-5% for HCM City floor will have positive impacts on Vietnam’s stock market. Technically, the wider trading bands will create bigger loss and profit margins in every trading session, thus making investors more excited in the short term and improve the liquidity of the market.
However, Cuong has warned that the stable recovery of the market will not greatly depend on the adjustment of the trading band, but on the macroeconomic conditions and the health of listed companies.
Only when macroeconomic indices see basic improvements, including exchange rate stability, lower basic interest rates and inflation rate, high GDP growth rate, and listed companies perform well, will the stock market recover sustainably and develop.
Cuong said that he personally believes in the efficiency of the measures taken by the government to fight inflation and stabilise the national economy. In fact, the measures have shown positive effects. Meanwhile, the market is being supported by good factors, including the decreased oil price, the dollar value recovery, and the gold price decrease. Therefore, it proves to be within reach to have a one-digit inflation rate by the end of 2009.
Regarding the stock market in the second half of the year, Cuong said that if the world’s political situation stabilises in the last six months of the year, and there are no big changes in oil and other material prices, the national economy will have a good performance. This will support the production and business of domestic companies, thus supporting the sustainable development of Vietnam’s stock market.
However, Cuong has warned that investors should not put high hopes on the strong recovery of Vietnam’s stock market in the last six months of the year. They should keep long-term vision on the market, which proves to have great potentials.
In fact, the current difficulties of the national economy have been influencing the fund raising and disbursement of investment funds. However, Cuong said, VinaCapital sees the difficulties as temporary difficulties, while VinaCapital aims at medium- and long-term investments.
Cuong affirmed that VinaCapital will continue making investments in companies which have firm business foundation and high development possibilities.
VNN
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