Positive signs of Vietnam's economy in the last half of 2014 were expected to drive up the Vietnamese stock market in 2015. However, some investors raised their concerns as the VN-Index climbed only 7 percent in 2014, much lower than 23 percent in 2013. How will the stock market be?
2014: Different emotional tones
The stock market hit shadow at the end of 2014 when the VN-Index slid, driven by oil price slumps and net foreign selling as a result of Circular 36/2014 /TT-NHNN. Short-term cash flows derived from ‘indexing” tickers and this worsened the investor sentiment because the stock market was very active, with daily trading value in excess of VND2 trillion a day. According to experts, the stock market ended 2014 with certain successes. For example, shares of Mobile World Investment Corporation (ticker: MWG) increased three times after just two months of listing. Shares of Southern Hydropower Joint Stock Company (ticker: SHP) climbed nearly two times in value after three months of listing.
In 2014, the Vietnamese stock market welcomed 22 new listings, including nine on the Ho Chi Minh Stock Exchange (HOSE). Huynh Richard Le Minh, Deputy Director of Viet Capital Securities Joint Stock Company, said new listings and public offerings will be more difficult in 2015 because the cash flow will be shared with the real estate market rather than only for the stock market.
Nevertheless, up to 32 companies delisted their shares, including three voluntary delisting cases: Fortunes Securities Corporation (PHS), Network Infrastructure Services Joint Stock Company (NIS) and Alphanam Investment Joint Stock Company (ALP).
ALP was delisted to become a family-run company. Thus, it will not need to disclose confidential business information as when it was a listed firm. Minh Phu Corporation (MPC) is buying shares from small shareholders to proceed with delisting.
Meanwhile, many companies were delisted because they violated listing regulations like three straight years of loss and/or accumulated loss in excess of registered capital. Typical cases are Song Da 207 Joint Stock Company (SDB), Song Da No. 19 Joint Stock Company (SJM), Mien Trung Petroleum Construction Joint Stock Company (PXM), Saigon Petroleum Construction and Investment Joint Stock Company (PSG) and PetroVietnam Nghe An Construction Joint Stock Company (PVA).
Due to poor business results, more companies will face delisting in 2015 because 28 companies reported suffering losses in two straight years and the first six months of 2014 as of the end of the second quarter of 2014. If they lose in the last six months of 2014, they will be forced to delist in 2015.
Opportunities for stock market in 2015?
The stock market in 2014 was propped by highly-liquid oil and gas companies. However, this may not be the case in 2015. According to research by Saigon Securities Inc (SSI) based on Bloomberg data, consumer goods, pharmaceutical, transportation, basic materials, and power cable and fertiliser will have high growth this year.
Meanwhile, some experts believed that real estate and bank shares will prevail in 2015 because cash flows will be more abundant as the SBV expects credit growth at 13-15 percent in the year. Besides the real estate market is expected to be more active when foreigners are permitted to buy houses in Vietnam. When the real estate market regains growth momentum, more real estate investment funds will be established.
Mr Nguyen The Minh, an expert at Viet Capital Securities Company, said that the revival of the real estate market will be an opportunity to reduce bad debts in the banking system and help banks improve their performance. Bank mergers and acquisitions (M&A) are forecast to surge in 2015.
This remark is grounded. The Extraordinary General Meeting of Shareholders of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) approved the merger with another bank. This was an inevitable trend in line with the banking system restructuring scheme adopted by the SBV and the Government. These two important factors are considered the foundation for experts to anticipate stock market trends in 2015.
Apart from the above two industries, Minh also saw prospects in the consumer goods industry. Inflation was low in 2014 because purchasing demand was weak, but lower petroleum prices will push down prices of consumer goods as a result. At present, the consumer goods sector has a very low P/E ratio compared to other countries in the region.
In 2015, nearly 200 companies will launch initial public offerings (IPO). Investors will have more choices.
The VN-Index is expected to climb 15 percent to surpass the 650-point threshold, the highest of seven years.
Luong Tuan
Vietnamese
