|
Experts cautious on market development
Experts were quizzed on the recent fall of domestic stocks, after soaring for three consecutive months, during an online exchange run yesterday by www.vnexpress.net.
Investors were unsure about how the market would fare for the rest of this year and outlined their views to experts, who said they were cautious about the situation when answering questions which included:
Le Quoc Hung, 32: What do you think the VN-Index will fare for the rest of the year?
Nguyen Ho Nam, CEO of Sacombank Securities Co.: The liquidity of the domestic market has strongly rallied after the VN-Index hit its rock bottom of 230 points, with trading volumes reaching record levels. This shows investors have renewed confidence in the stock market and domestic economy.
During the last few days, the market clearly saw accumulative moves. Corporate results in the first half of the year are expected to be satisfactory. Economic indicators are stabilising – gross domestic product (GDP)grew about 4.5 per cent in the second quarter, and inflation increased 4 per cent in the first six months – the domestic market will see a new cycle of gains during coming weeks. I have high expectations on positive changes in the global, as well as domestic economies, in the final quarter. If this happens, the index will have sustainable growth in the next year.
Vu Thanh Danh, 28: Is the index correctly reflecting Viet Nam’s economic conditions?
Dinh The Hien, Financial Expert: Impressive increases in the index during the last three months reflected the economy’s health after it had overly-negative worries, as well as assessments, which caused it to slump below 250. But too strong an increase momentum now indicates investors are overly-optimistic. A safe level for the index should be about 400 and if it exceeds 500, it would probably adjust sharply, possibly to below 400.
Nguyen Thanh Hung, 35: The index has increased significantly since the beginning of the year. Do investors have unrealistic expectations?
Nguyen Ho Nam: The index has grown 50 per cent since the beginning of the year, and is 60 per cent below its peak of more than 1,100. The market is absolutely normal.
Nguyen Thanh Tu, 32: The domestic economy is gradually recovering, but the stock market has rallied fast during recent few months. Current market levels should have been in mid-2010?
Dinh The Hien: Through basic analysis on share prices, firms’ profitability, chances of economic recovery and share demand and supply, the index is expected to be about 450 by the end of the year so your assessment is reasonable. The market is getting much encouraging news, including a second-quarter GDP increase compared to the first quarter and firms’ profits expected to exceed targets in the first six months. With these factors, people hope the index will reach 500. But the current level has reflected those factors, so it’s hard to see it remaining stable about 500.
Dan Chinh, 31: How do you assess the long-term and short-term trends of the Vietnamese stock market?
Dinh The Hien: The domestic market will gradually increase in size with diversified goods for investment. It will be more and more stable and become an important capital market for the country. But within the next two years, the market will mainly see speculation activities as we have not had investment channels that lure money monthly from people, such as voluntary pension and health insurance funds. With [most] money still targeting short profits, and money coming from credit sources, instability is high.
Phung Huu Phu, 45: A great deal of money has poured into the market during the last few months, helping its rapid recovery. How do money flows look for the coming months?
Dinh The Hien: Stock market hikes coincided with strong credit growth during April to June. There was possibly a significant amount of money poured into the stock market from credits, motivating it to soar with great liquidity.
Credits will become more selective in the coming months. Banks, after a period seeing high outstanding loan growth, now have difficulties attracting deposits. There is evidence they are raising rates to lure capital. If there are no new capital sources, such as foreign investment capital, the market’s capital influx is unlikely to be as strong [in the coming months] as it is now.
Nguyen Quoc Trung, 40: Will there be a massive sell-off if there is negative news from throughout the world?
Nguyen Ho Nam: Usually when there is bad news from the world markets, investors operating internationally withdraw capital from the stock market and invest in safer assets. Investment funds continuously changed their portfolios, creating great selling pressure. This happened on the domestic market during the second half of last year and the first quarter of this year. Transactions by investment funds in Viet Nam now represent below 20 per cent of the trading value on the market, with the rest carried by domestic investors. There will not be massive sell-off like there was previously.
Bui Cong Gia, 26: Can the "trio" of banking, insurance and securities cause the market to slump like DPM and PVFC (Phu My Fertilisers and PetroVietnam Finance Company) did last year?
Nguyen Ho Nam: Fortunately the domestic financial market has not fully integrated into the international financial market. During recent months, while developed countries struggled with rescuing the banking and finance systems from negative impacts caused by toxic assets, and recovering demand in the world economy, Viet Nam was much less influenced. The Vietnamese commercial banking system operated efficiently with satisfactory business results during the first six months. Bad debts were controlled and domestic consumption grew more than 20 per cent.
With those reasons, I don’t think the "trio" will see great fluctuations to badly affect the market. Perhaps some companies in the areas are seriously affected due to weak business capacity, but they are a minority which do not represent the sectors.
Vu The Vinh, 52: Many new shares are getting listed in great quantities on the domestic market, together with many additional share issues, as well as Government bond issues. Where can investors get the money to invest, in order for the market to develop sustainability?
Dinh The Hien: Capital sources are too low compared to the capacity the economy can mobilise. There are about 300,000 securities accounts, only about 4 per cent of the population – a low ratio compared to most parts of the world. Foreign capital influx also remains low but is expected to increase strongly when the domestic economy looks good next year. Thus, in theory, demand can absolutely be correlated to supply.
But in order to lure new investors, particularly foreigners, the domestic market must assure quality goods. This depends on the supervision of market regulators, the development of information supply and analysis channels, and especially efforts by firms’ management boards to develop corporate values through proper business strategies.
vietnamnews
|
