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Volatility seen for stocks
Watching stock prices blinking on the wall of a Ho Chi Minh City brokerage, Nguyen Thi Minh Thu and the dozens of other private traders watch with alarm as the value of their investments falls.
Investors in Vietnam's small stock market – one of Asia's worst performers last year - expect a volatile time ahead as the fledgling bourse feels the impact of the global economic crisis.
"The situation now is not stable," said Thu, 39, watching the red numbers that indicate another drop in stock prices.
HCMC's bourse trades only in the morning. The part-time private traders, who generally have other occupations, visit brokerages in their spare time to quietly monitor prices, talk with each other about the trends, and place their orders at teller windows behind them.
"In the next few months there will not be many breakthroughs. The old and experienced investors are not optimistic," Thu said.
Another investor, Tran Thi Ly, 38, said Vietnam's stock market "is not as stable as foreign ones."
Vietnam began securities trading in 2000. By March 2007, one of the world's fastest-growing markets had hit a record high of 1,170 points.
A correction soon followed in what analysts said was an overvalued market.
The index fell further as Hanoi raised interest rates early last year to temper soaring inflation.
Nevertheless, Thu and others said new investors had recently come into the market and the local bourse had moved more in line with foreign indexes.
"The market has improved recently but it seems that this time the Vietnam stock market has been a bit more dependent on foreign indexes," said Nguyen Phong Hoang, 48, watching the stock numbers at another brokerage.
Hoang said that, while more money had been invested earlier this month "due to some signs of a better economy," volatility could be expected because the longer-term economic outlook remained uncertain.
"If the economy improves, the market will follow," said Hoang, a trader for more than four years.
The VN-Index represents a range of companies including banks, securities firms, petroleum businesses, manufacturers, and food and beverage producers.
A rally between late February and mid-April boosted it by 47 percent but was unsustainable, said Peter Ryder, chief executive officer of Indochina Capital in Hanoi.
The rally saw a significant rise in trading volume, while some investors may have moved out of gold and into equities, Ryder said, adding that global markets were generally volatile now, though there were some encouraging signs for Vietnam.
"We can see the earnings reports on Vietnamese companies, the first few that have come out, are fairly positive," he said.
Dominic Scriven, director of Dragon Capital in HCMC, said "you can make a reasonable case that the stock market will end the year higher than it is today" although many uncertainties surround the forecast.
Ryder agreed the market would probably trend higher by year's end, but when the rally would begin was unclear.
Prime Minister Nguyen Tan Dung said recently the country's economic growth would pick up and could reach between 5 and 5.5 percent in 2009 after expanding by 3.1 percent in the first quarter, the lowest on record.
The VN-Index closed Wednesday, ahead of a long holiday weekend, at 321.63 points, up 1.88 percent but still below the 347.07 reached at the end of the recent rally.
"The stock market is recovering, even though it is still weak," Vietnam's Deputy Minister of Planning and Investment Cao Viet Sinh told an international conference in HCMC last week.
thanhnien, AFP
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