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Market set to bottom out in 2009
While stock investors look for a glimmer of hope, analysts believe the domestic equity market will bottom out this year.
Ken Tai Chee Ming, Singapore-based Kim Eng Securities’ senior technical strategist, said the VN Index was likely to continue dropping.
Ming said Vietnamese share prices were more expensive than Hong Kong, Indonesia, Singapore and Thailand but cheaper than Malaysia, mainland China, India, Japan, Korea and Taiwan. The Vietnamese dong was expected to depreciate further as efforts to boast exports were not good for the equities market in the short to mid-term.
“Global markets may bottom in the fourth quarter of 2009 and we should expect the VN Index to bottom out this year too,” Ming told Kim Eng Securities Vietnam investors at a talk show last week, adding that investors could consider jumping into the market in October. The VN Index on February 20 closed at 252.57 points, the lowest level in three years and technical analysts said the scope for the market to slide towards 200 points was possible.
“The VN Index is unlikely to recover until Vietnam’s economy recovers,” a London-based Business Monitoring International analyst said. Christopher Blank, Ho Chi Minh City Securities Corporation’s technical analyst, said: “Wait for the 220 support level and see what happens.” Ming added that the next key long-term support was 221 points, but if it failed to hold, it might head lower.
Ming believed Asia including Vietnam would not decouple from the US. However, markets are leading indicators and should bottom ahead of economic numbers.
Spencer White, Merrill Lynch’s former Asia-Pacific chief equity strategist, did not predict when the market would bottom out, but said there would be substantial opportunities in Vietnam’s equity markets this year, especially the year’s first half.
“Listed equity prices have aggressively discounted the bad news that still lies ahead and prices will begin to discount a recovery long before the economic data appears to support it,” said White, who is now a Hanoi-based Thien Viet Securities strategic advisor.
For opportunities in 2009, Ming advised investors to look for Vietnamese companies that have a relatively low P/E and P/B with good cash flows that may benefit from Vietnam’s stimulus package, like construction and healthcare.
White liked companies that were sectors experiencing more secular than cyclical growth like urbanisation, consumption, infrastructure and energy. “I will be looking to deploy capital in well managed companies, with strong market positions at times of market weakness,” said White.
VietNamNet/VIR
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