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HSBC: Vietnamese investors have become more finicky   2009-05-11 - TBKTVN

In its latest report about Vietnam’s stock market, the Hong Kong and Shanghai Banking Corporation (HSBC) said that Vietnam’s stock market has shown some positive changes. However, the banking group is still reserve when discussing the recovery of the market.

 

 
The report said that since the beginning of the year, Vietnam’s stock market has been witnessing the sharp rises and falls of stock prices, the same things which have been occurring in the global market.

 

During the period from February 24 to April 14, the VN Index increased by 47% before it decreased again by 8% in the remaining days of the month. The index has increased by 1% since the beginning of the year.

 

Positive changes

 

According to HSBC’s experts, the average transaction volume in the recovery period in April increased. The transaction volume of the two bourses was $69mil a day in April, the highest level since September last year.

 

Thanks to the stock price increases, the number of share items with market capitalisation values high enough for foreign investors to inject money into has also increased. Eight share items now reportedly have the capitalisation value of $500mil and higher, while there were only four at the end of February.

 

HSBC’s report affirms that foreign investors did not drive the recovery of the stock market. Since the beginning of the year, the net purchase volume of foreign investors is $3mil only.

 

According to HSBC, foreign investors still make up 1/5 of the total transaction volume on Vietnam’s market. However, it seems that new foreign capital inflow into the market remains limited. Meanwhile, foreign investors are now focusing on restructuring the investment portfolios of closed funds.

 

One of the reasons, according to HSBC, is the decreased liquidity of the VND and the difficulties in converting the VND got from stock sales into US$.

 

Meanwhile, small Vietnamese investors, including housewives, have become interested in shares. It seems that the last year’s gold fever has cooled down.

 

Caution still prevailing

 

HSBC said that it is really difficult to determine the actual values of share items in the market. The P/E index on the HCM City bourse is now estimated at 12.9. However, the figure is not very useful if investors cannot predict the profit of listed companies in 2009.

 

To date, only seven big listed companies have reported profit for the first quarter of the year, but their post-tax profit decreased sharply in comparison with the same period of last year.

 

HSBC remains cautious about making predictions about the performance of the stock market due to the lack of transparency in profit declaration and the indeterminateness of stock values.

 

In fact, Vietnam’s stock market has share items with reasonable value and good prospects in the long term. However, HSBC’s experts said that the stocks in other Asian markets are also cheap, and that they can see more prospects and lower risks in other regional markets.



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