Vietnam Stock Market May Grow 30% in 2011: Viet Capital Securities

Vietnam’s stock market benchmark is poised for at least 30% growth next year thanks to further macroeconomic stability, an executive at Viet Capital Securities (VCSC) said in a recent report.

 

Because Vietnam shares now have low valuations while it had received limited hot money from global investors, the market may have upward re-rating and receive significant inflows in the new year, said VCSC’s Head of Research Marc Djandji.

 

The price to earnings (P/E) of Vietnamese stocks is currently around 9.9x, compared to 12.4x at the end of the global financial crisis, the VCSC said.

 

The benchmark VN-Index closed at 475.41 on December 23, still down 3.8% from end-2009. VCSC forecast the index might increase to 625 in 2011.

 

The market may see further gains if the government starts targeting inflation and economic stability rather than growth and as corporate earnings are expected to continue growing in 2011, said Djandji.

 

“It is time to be bullish in Vietnam. Greater macroeconomic stability should bring investors back into dong assets, which could lead to substantial upward re-rating, exclusive earnings per share (EPS) growth. It could be lucrative to invest in Vietnam today,” he noted.

 

Deputy General Director of Thang Long Securities Quach Manh Hao predicted “With the expected loosening policy in early 2011, the VN-Index will rise 15% in the first quarter from end-2010 and additional 10% in the second quarter against Q1. The market will be then stable in the third quarter.”

 

If Vietnam can stabilize its macroeconomy, foreign portfolio inflows would be on the rise, particularly in 2012 when the country opens its financial market to foreign players, he added. (VIR)