Small and medium firms instead of blue chip stocks will be the focus of investors this year as the former performed far better in 2009, and real estate is set to dethrone banking stocks as the preferred choice.
These are the major trends that experts expect to take shape this year.
Louis Nguyen, President of Saigon Asset Management (SAM) which is the investment manager of two closed-end funds – Vietnam Equity Holding (VEH) and Vietnam Property Holding (VPH) listed on the Frankfurt Stock Exchange – said the company in 2010 will switch to small and medium enterprises in Vietnam.
VEH rose 47.1 percent and VPH 10 percent in 2009 while Vietnam’s benchmark VN-Index closed up 59 percent.
Nguyen said the funds have for many years focused on blue chips which last year rose at the market’s average rate while small and medium enterprises soared by 100- 105 percent.
The Director of another foreign-owned asset manager based in Ho Chi Minh City, who did not want to be named, said his company has made “big changes” and will pour money into small stocks this year.
“Many small stocks have seen healthy growth while big ones have stood still,” the Director said.
He said the company was only adjusting its investment according to the market.
Meanwhile individual investors have said they will not look to buy finance and banking stocks, and might even divest. Some said they will only buy these stocks as a kind of savings if they have unused money to spare.
A HCMC-based investor named only as Mai said she has sold out her finance and banking shares to buy other stocks.
“Most banking stocks have been at a standstill or suffered losses since February last year,” Mai said.
Vietnam Commercial Bank (VCB), Vietnam’s first lender in market capitalization and one of the four listed ones on the Ho Chi Minh Stock Exchange, dropped from VND58,000 in August to VND45,000 by year end.
The second lender, Vietinbank (CTG), which made more than VND3 trillion (US$162 million) in pretax profits last year, dropped steadily from VND41,000 in July 2009 to VND29,500 on December 31, and always stayed far below the VN-Index.
Meanwhile, Saigon Commercial Bank or Sacombank (STB) stayed at around VND36,000 from July to September and then went down to VND24,000 in December.
The four banks in the southern market, including Vietnam Export Import Bank (EIB) that listed in October, all saw their 2009 pretax profits rise 20-50 percent from 2008.
Asia Commercial Bank (ACB) shares on the Hanoi Stock Exchange stayed at VND45,000 from July to the end of October last year, and have traded between VND32,000 and VND38,000 since November, despite earning pretax profits of more than VND2.8 trillion ($151.6 million).
According to experts, the banking sector is no longer interesting as banks have issued such a large number of shares that no investor, either individual or institutional, can buy enough to affect the prices.
As the banking sector will no longer benefit from the government stimulus package this year, “to invest in banking stocks is to surely bury your money,” Mai said.
Real estate to prevail
Most portfolio and individual investors have put real estate as their prime investment target as the stocks earned them a lot of money in 2009 when banking failed them.
The Song Da Urban and Industrial Zone Investment and Development Joint Stock Company (SJS) rose 450 percent, from around VND50,000 in late February to its year-high of VND218,000 in October, and dropped only to VND186,000 when the benchmark plunged in late January.
Likewise, the Tu Liem Urban Development Joint Stock Company (NTL) surged from VND30,000 in February to VND171,000 in November, or 540 percent, before dropping to VND126,000.
Most investors are confident about the growth of the sector in coming years as housing demand seems to keep increasing.
They also look forward to bonus shares as real estate firms are not listed with as large capital as banks and thus would have to raise their capital further through share issuance or bonus shares.
Vu Quang Hien, Investment Director at SAM which also chose real estate as preferential stock, said the company will buy buildings in HCMC.
“Building material prices are rising while construction procedures cost a lot of time, so buying the buildings will bring us a big chance,” Hien said.