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17-10-2009 11:09 PM #1
Broker sees stock market bubble on the horizon
Traders will continue to place more buying orders in the short term as investors are digesting good earnings and the central bank’s proposed second stimulus plan, and the market may enter a bubble, brokers warned.
Vietnam’s benchmark VNIndex, a measure of 175 companies on the Ho Chi Minh Stock Exchange, Thursday rose 11.73 points, or 1.94 percent, to close at 617.38, partly because it followed overnight gains in the US, traders said. The VN-Index has more than doubled since hitting a four-year low on February 24.
A powerful rally lifted the Dow Jones Industrial Average to its first close above 10,000 in over a year Wednesday, amid growing optimism about a recovery in profits and the overall economy.
In Hanoi, the HNX-Index Thursday advanced 6.15 points, or 3 percent, to close at 211.51.
High figures from corporate earnings reports have boost investor optimism and traders are ready to pour money into the market, Hanoi-based VNDirect Securities said.
Pha Lai Thermal Power Joint-Stock Co., Vietnam’s largest listed power company, earned VND996 billion ($55.8 million) in January-September pretax profit, the firm said Tuesday on its website.
That was more than three times its full-year target of almost VND300 billion, and a 26 percent rise from last year’s corresponding profit of VND793.3 billion, according to company figures on the Ho Chi Minh Stock Exchange’s website.
PetroVietnam Finance Co., a unit of Vietnam Oil & Gas Group, said pretax profit exceeded its full-year target in the January-September period as the stock market rebound boosted its equity investments.
Pretax earnings reached VND762 billion ($42.7 million) in the nine months to end-September, equal to 191 percent of the company’s full-year target, it said in an e-mailed statement Wednesday. Revenue was about VND4 trillion, equivalent to about 103 percent of its full-year target.
Hanoi-based PetroVietnam Finance now expects pretax profit and revenue to reach VND1 trillion and VND5 trillion respectively this year, according to the statement. The company also said it aims to list shares on the Singapore Stock Exchange in 2010. It didn’t give a timeframe.
Meanwhile, third-quarter earnings from dairy maker Vinamilk (VNM) and Asia Commercial Bank (ACB) were fairly positive, which added to the positive tone of the current earnings season, Fiachra Mac Cana, managing director of Ho Chi Minh City Securities Corporation (HSC), said in his company’s market comment.
Vinamilk posted a nine-month pretax profit of VND2 trillion ($112 million), exceeding its full-year forecast by 21 percent, while Asia Commercial Bank said pretax profit reached almost VND1.8 trillion (US$101 million) for the period, up 35.5 percent year-on-year.
Mac Cana also said, “The feeling that the second stimulus package was close to completion and that market liquidity would continue to flourish in the short term combined with positive earnings news from overseas to boost sentiment.
“And for the next few days the market may well be carried along by pent up buying energy now that we have broken out.”
Vo Huu Tuan, head of Bao Viet Securities’ Ho Chi Minh City branch, said Vietnamese stocks may rise “too fast.”
He said, “Gains in the stock market have spurred more and more people to take their savings from banks to buy shares. So, the market will rise further with higher investment inflow in the near future.
“However, my concern is that the market has probably increased a bit too fast, and may enter a bubble, with many stock prices increasing way beyond their real value,” he said.
“There are signs of economic recoveries both locally and internationally, but I think those factors have already been reflected in share prices. So, if the market rises further, it will be mostly because of investors’ good sentiment, not fundamental momentum. So it’s a bit worrying.
“I would suggest local investors take a deep breath before they put more money into the market. They should carefully select the stocks that have good fundamental factors with positive results from their core businesses.
“Given the economic recoveries domestically and internationally, I would consider buying shares in companies doing exports and transportation.”Watch your thoughts, they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.
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