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Stock market’s recovery period begins
Securities investors have been told that the stock market’s recovery period has started, and that it is now the right time to make investment. However, they have also advised investors to remain cautious.
Fiachra Mac Cana, Analysis Director of HCM City Securities Company, affirmed that the stock market has entered the recovery period after continuously falling since last October.
“All our technical analyses show the same result: The stock market will rise in the time to come,” he said.
The stock market recovery explains why investors have left other investment channels and are heading back to the stock market.
According to Fiachra Mac Cana, in general, in the first stage of the recovery period, investors will focus on cheap shares. “Cheap stocks” means share items which are being traded at prices close to face value.
However, experts say that investors should look at other aspects of share items rather than just considering prices because cheap stocks do not always mean good deals.
Most domestic investors do not care about other indicators of listed companies, including turnover, profit and prospects when they make investment decisions. Meanwhile, these factors prove to be more important.
According to the HCM City Securities Company, the net profit of the 30 leading listed companies in 2008 decreased by 10.4% over the same period of 2007. It is expected that in 2009, the decrease will be some 2.8% only.
The stock prices are now at reasonable levels for long-term investment. The average P/E now is a little over 10x. “This would be relatively high if the market was in its highest peak, but this is reasonable in the current stage of the market,” said the director of a securities company.
Dang Thi Hong Phuong, General Director of SSI’s Fund Management Company, also believes that it is now the right time to make investment.
She said that the government and the State Bank of Vietnam have been very successful with their plans to curb economic downturn.
The GDP growth rate in Q1 2009 was not as high as in Q1 of previous years. However, Vietnam needs to be satisfied by the figure in exchange for other measures to stabilise the national economy.
However, Phuong said that the future of the economy and the stock market will still depend on many factors, including how the government deals with the capital that will be flying into the stock market.
Phuong does not think that inflation will be a problem in 2009.
However, she has advised people not to be too optimistic about Vietnam’s stock market, saying that the market, like the world’s market, will not perform in a simple way of the ‘V-shape’ or ‘L-shape’ model, it may go in a ‘W-shape’ or ‘many W-shape’ way.
In the latest news, the State Bank of Vietnam is drafting a bill on credit institutions, while it plans to prohibit domestic commercial banks and foreign bank branches from giving loans to fund securities investments.
The compiler said that the loans prove to be risky for the banking system, as can be seen from the global finance crisis. Therefore, the central bank has been insisting on tightening the funding of securities investments.
Meanwhile, many credit institutions have resumed funding securities investments, while some other banks have just begun providing this kind of credit.
VietNamNet, DTCK, VnMedia
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