Foreign capital will continue running into Vietnam’s stock market in 2010, given the government’s efforts to deal with difficulties of the economy and bring back a macroeconomic stability, Alan T.Pham, chief economist of VinaSecurities said.
The country will hold the 11th national communist party congress in January to select a new leadership and build up socio-economic plans for the next five years. The history showed that the economic growth will accelerate after the congress; so foreigners have entered recently to tap new opportunities, T.Pham said.
Meanwhile, Vietnam shares have lower valuations than in other regional peers, with P/E at 9-10x currently, compared to 15-17x in other markets like Thailand, Malaysia, Indonesia.
With the central bank’s decision to tighten monetary policy since October, inflation pace will slow down after the first quarter of 2011, which will help pull down lending interest rates to support local firms.
The USD/VND exchange rate has also been stabilized thanks to more dollar inflows into the country, including overseas remittances, FDI disbursement, ODA and foreign indirect investment, which will be supportive factors for the market, the chief analyst noted.
The government is speeding up the equitization process, which has been stagnated for two years due to the global economic crisis; and more large state-run enterprises will go public from 2011, which is expected to stimulate foreign appetite.
In several recent months, hot money from western investors has entered Vietnam’s equity market, with an average disbursement of $1 million/month. The trend will continue in 2010, which is expected to help support local sentiment and the whole market, T.Pham said.
He added overseas investors have poured $1 billion into Vietnamese shares and bonds this year, including two third in shares. (Securities Investment)
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