Mr. McHunt Nguyen, CEO of VinaSecurities, remains upbeat about Vietnam’s stock markets in 2011.

What is your opinion on Vietnam’s stock markets during 2010?

As at December 27, 2010, the HoSE index was sitting at 473.05 points and there were just a few days of trading left. At the end of 2009 it closed at around 495 points. Some investors brought back annual earnings, but others, whether institutional or individual, could not do so given the scenario of inflation and economic growth. Depositing money with a bank was more effective than stock trading this year, proving that stock trading was a less profitable investment channel in 2010.

From another angle, though, Vietnam’s cheap shares are very attractive to foreign investors, as evidenced by the continuous net buying from foreign investors. If the HoSE index were to trade at 13-14 times estimated earnings it could reach 600 points in 2011.

What was most memorable about 2010?

Since the beginning of the year, Vietnam pushed for growth. When surging inflation and consumer goods prices loomed large, the government and the State Bank of Vietnam (SBV) shifted towards promoting the control of inflation and prices. It is hoped that we realise a timely remedy and everything in 2011 should be oriented, as per the tenor of the meeting of the Economic Committee of the National Assembly on the morning of November 25.

Deposit interest rates were 18 per cent for some time in 2010 and the VND/USD exchange rate increased from VND19,000 to nearly VND22,000. Gold price fluctuations also threw the domestic economy into turbulence.

What are your forecasts for Vietnam’s stock markets in 2011?

Vietnam’s cheap stock markets need policies that will tame inflation and boost investor confidence. There should be less focus on growth and a more on macro policies as well as monetary policies. In order to maintain a sustained rally in 2011, the exceedingly cheap shares require higher interest rates, a more stable currency and bigger foreign exchange reserves.

The $14 billion the International Monetary Fund reported Vietnam as having at the end of September is “barely enough to cover short-term debt of around $6 billion to $7 billion and a wide trade deficit of $12 billion” that the government projects for this year. If these are met, there is a good chance that the market could re-rate in the first half of 2011.

GDP growth is estimated at 7-8 per cent in 2011, with exports increasing 12 per cent and weight of investment for development at 40-41 per cent. Noteworthy sectors in 2011 will include rubber, real estate and finance.

What will be the advantages and disadvantages for Vietnam’s stock markets in 2011?

Well, in terms of advantages, we think stability in macroeconomic as well as monetary policies is the key. Party Congress XI in January is also important. And the last is inflows into Vietnam in connection with foreign factors.

In terms of disadvantages, they include credit ratings for foreign institutions, excessive imports of luxury products, control of inflation and consumer goods prices and the financing of corporate loans with decreased interest rate control.

From a corporate perspective, what do you expect from stock markets in 2011?

Macro and monetary policies are conducted with a balance between growth and inflation. If these can be met, then the market will re-rate to the 600 level, providing that the HoSE index were to trade at 13-14 times estimated earnings.