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Investment funds call Vietnam’s stocks remarkably cheap
A leading American fund manager has made very bullish statements about the Vietnamese stock market.
Franklin Templeton, a diversified investment fund with nearly $600 billion under its management, believes that Vietnam’s stocks are the cheapest in the world and that the fund can find many opportunities here, according to the Bloomberg wire.
Bloomberg quoted Mark Mobius, President of Franklin Templeton, as saying in Seoul on April 22 that Vietnam’s stocks are now very cheap, and if investors can purchase good stocks and hold them, they will have many opportunities to profit.
Mobius is an influential money manager. The California-based Franklin Templeton fund family is now has investments of $34 billion in newly emerging markets. In 2008, it set up a representative office in Vietnam.
Mobius called attention to Vietnam’s low price to earnings ratio (P/E), the fourth lowest in Asia after South Korea, Thailand and Pakistan. The VN Index now is still at less than half of its peak of 1,170.67 points seen in March 2007.
Mobius said that he recently visited a food processing factory in Vietnam and he was very impressed by the operations of the company.
The VN Index, the ‘thermometer’ of 224 companies now listed on the HCM City Stock Exchange, has risen by seven percent so far this year after a 57 percent gain in 2009. It got a boost when Vietnamese newspapers reported that inflationary pressures seemed to ease in April in comparison with the previous months.
Dang Pham Minh Loan, Investment Director of VinaCapital, a fund management company based in HCM City, also sees opportunities in stock market for medium and long term investors. Private investment funds are seeking investment opportunities, she added, because “in current conditions Vietnam’s stocks look attractive if compared with the expected growth of enterprises.”
In fact, however, Vietnamese enterprises have been facing big difficulties. Unusually high bank interest rates have made it more difficult for enterprises to access bank loans. Meanwhile, people who have idle money prefer to deposit it in banks than purchase shares. However, according to Loan, Vietnamese enterprises have been overcoming such difficulties by using stockholder equity or paying dividends in shares instead of cash.
“Previously, our VOF fund could not find investments because we considered stocks overpriced, but we can see many opportunities now,” Loan said. The VinaCapital fund manager added that VOF expects to invest some $40 million in the first six months of the year in both listed companies andr private companies with high potential for growth.
According to FPT Securities Company (FPTS), foreign investors are very interested in Vietnam’s stocks, especially the shares of sector-leading companies. Foreign investors have increased their purchase volumes in recent trading sessions. The total net purchase of foreign investors was 360 billion dong (Nearly $200 million) last week. The move by foreign investors to increase their purchases, according to FPTS, can be understood to mean that they believe the market will continue growing.
vietnamnet, DTCK
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