Stock Market An Attractive Investment Channel
By Nguyen Quan
What happened to Vietnam’s stock market between February 15 and 21
While many economic experts are still worrying about Vietnam’s economic situation, stock investors seem to ignore the woes as their operations have helped the local stock market continue to gain points. Dragon Capital Group ranks Vietnam’s third among Asian bullish stock markets these days.
The unexpected growth is ascribed to positive macro policies recently taken by the Government. Investors have also pinned their hope on positive analyses by both foreign and domestic specialists.
The report assessing the Vietnamese economy released by HSBC on Monday morning puts Vietnam’s 2012 gross domestic product (GDP) growth at 5.7%. Likewise, a Standard Chartered report says that after a year of hyperinflation, prices of commodities in Vietnam have no longer increased steeply.
Given the decelerating inflation, Standard Chartered expects that the central bank’s policies on cutting interest rates will take effect in the second half of this year when authorities revise down rates. Moreover, Standard Chartered also hopes for Vietnam’s GDP growth attaining 5.9%, the same as in 2011.
Aside from the above positive information, analysts maintain that Vietnam’s stock market is becoming attractive again considering its profitability. During the 2007-2011 period, the market saw a long time of accumulation, particularly last year when it shed 30% of its value due to inflation and the dong depreciation. What’s more, the Vietnamese stock market is being appraised lower than its market value compared to other markets in the region. In addition, the stock market is always the thermometer for the economy and indicates investors’ expectations.
In the meantime, chronic problems such as inflation and interest rates are improving. According to the latest report by the offices of statistics of Hanoi and HCMC, the consumer price index of both cities may increase less than 1.45% over January. The rise is mostly due to price hikes during the Lunar New Year festival and power price increase earlier this year.
Analysts say the nationwide inflation in February may be lower than the 2.09% level in February 2011 and even below 1.89%, the average of the past decade. They predict the ratio will be between 1.5% and 1.89%. This will pave the way for the Government to cut interest rates. As long as medium- and long-term issues relevant to inflation and interest rates improve, the stock market will turn out to be an attractive investment channel.
At the close of the February 21 trading session, the VN-Index lost 3.07 points, or 0.74% of its value, to stand at 410.91 points, with more than 59.08 million stocks traded, worth VND791 billion. On the Hanoi bourse, the HNX-Index shed 0.38 point, or 0.59% of its value, to stand at 63.89 points, with 80.58 million stocks traded, worth VND648 billion.