Stock Market Honeymoon

3:36:57 PM | 9/24/2014

The stock market and the investors are enjoying their "honeymoon" when the there is a sign of the non-stopped increase of the stock prices on stock market. Under the circumstances the economy faces enormous difficulties, the recovery the stock market is attracting huge interest from the investors.
If compared with the peak period of 2006 and 2007, the price of the stock today is still too low, but if compared to the price one year ago, many stocks have risen from 30- 40 percent, even that some of the stocks have increased by more than 100 percent. Therefore, according to the evaluation of a number of the stock experts, the current price is not too low.
 
According to Doan Ngoc Hoan, General Director of the IVS securities, the P/E ratio of the stock market today is approximately 15 times that of other countries in the region; and particularly, those that are listed in the VN30 are much higher.  The increase of the VN- Index in recent months from 600 to 615 and then up to 640 is resulted by the increasing cash flow into the large stocks.
 
The breakthrough of the major stocks such as PVD, GAS, and VIC due to the strong trading in recent months has helped the VN- Index to make a breakthrough, which raised the investors' concerns that the stock market is moving toward the peak and this notices the high risks of selling out the large amount of stocks in the upcoming time; whereas the supportive information or the real breakthrough are enough to create a good foundation for the market.
 
The stock market has set a new price level; many experts suggested that based on the current stock price, the investors should make short-term investments to reach the greater efficiency. The current market is more suitable for the form of short-term or surfing investments This is due to many stocks that are speculated are higher than those in the recent time but some stocks are still lower than the face value. When the cash flow has returned to the market and the liquidity has improved, there are less concerns about the risks of the cash flow for the speculative stocks. "In the context of the economy that begins to regain the growth momentum, there will be an big opportunity for many listed companies to overcome difficulties and thrive again," said a securities expert.
 
The growth opportunities are relatively clear but there still needs a selective purchasing of the stocks because the blue chips stocks or the stocks in the leading areas are still standstill because they have already increased recently while the storks of some enterprises are low but it takes more time to analyse the ability of the enterprises before buying.Besides, the more investment in the speculative stocks leads to more risks of the adjusted stock prices in the short time and the current stock prices are not low enough to guarantee a safe investment.
 
Other ideas are that the short term investment still exposes potential risks. According to the analysis of Giang Trung Kien, Analysis Director of the FPT Securities Co., Ltd at the current period, the market is experiencing the high limit points and pressures of fixing the profit, which leads higher risks to the investors. Besides, the the market is still in the long term uptrend so the long-term investors can accumulate the stocks at this time.
 
Although the stocks in the petroleum group have soared in the recent times. Due to the good business performance in the third quarter that is expectedly better in the next 6 months, the P/E ratio of the stocks in this group will reduce more drastically than the current P/E. This is seen as an important basis for assessing the future cash flows for this group. According to the analysis of the SHS, the stocks in the petroleum group will continue to attract the cash flow in the future.
 
Due to the strong increase of the stock price in the recent times, both of price and the number of the stocks in the fisheries sector that have been transacted have increased. In the future, this group will continue to attract the attention of the investors. In addition, the fishery stocks will likely continue to attract the greater cash flows because of the high expectations in the revenue growth when many seafood enterprises in this field are expanding their market share in the important exporting markets.
 
The experts indicate that in the correspondence with the trend of the strong growth of the good value stocks, the other stocks' price will also increase; especially, those stocks with low value can not be assessed based on the conventional methods. In theory, the EPS is negative, the P/ E of the stock is almost no meaning but its price still rises. Even that many stocks still rise, the business results of the enterprises are still negative.
 
Luong Tuan