Securities companies in Vietnam believe that the local stock market would have brighter prospects and see more gains this year, given the government’s priority to stabilize the macroeconomy.
SME Securities JSC believed in 2011 the stock market will see strong growth if the inflation is controlled right after the Lunar New Year and curbed at 7.5% in the whole year; the forex rate is stabilized at VND20,500-VND21,000 per dollar; the gold price is stable at $1,400/ounce; and interest rates gradually go down to 12%-14% in the second quarter.
The broker said the pressure of curbing inflation, stabilizing the value of the local currency and maintaining payment balance would be a driving force that leads cash inflows back to the stock market.
Saigon Securities (SSI) forecast the VN-Index is likely to grow 20%-25% this year. If Vietnam can achieve a 7% GDP growth rate in 2011, along with rising exports and narrowing trade deficit, then investors will return, it said.
Sharing the same optimism, Au Viet Securities believed the stability of inflation rate and exchange rate, good conditions for integration, and stable monetary policies would lend a support to the stock market.
The market growth will depend on the government’s ability to curb inflation, slow down interest rates, stabilize the forex rate, and expectations on higher corporate earnings, said Nguyen Viet Cuong, deputy director of VinaCapital.
The VN-Index may see a strong growth in the second half of 2011, hovering around 500-600, when the inflation rate stands at 8%-9% and interest rates go down to 12%-15%.
Tran Dac Dinh, general director of the Hochiminh Stock Exchange (HOSE), has also predicted the stock market would grow strongly this year, given rising demand of businesses in raising funds for production activities and the government’s efforts to develop the capital market.
Amid optimism, many analysts still remain cautious. Le Xuan Nghia, vice chairman of the National Finance Supervision Council, said macro indicators like inflation rate, exchange rate and interest rates, which may have strong impacts on the stock market, remain unknowns.
SSI also warned that the central bank may not loosen monetary policies soon, because it prioritizes the task of fighting inflation.
MeKong Securities urged market authorities to amend some current regulations to help make the securities market more attractive as a way to lure global investors. (Vietnamnet)
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