The Hong Kong and Shanghai Banking Corporation (HSBC), it its latest report about Vietnam’s stock market, Vietnam Monitor, still says Vietnam’s stock market is less attractive than other regional markets.

HSBC highlighted that after reaching a peak of 600 points in late October 2009, the VN Index had decreased by eight percent by November 9.

The VN Index has lost more points than other Asian markets from the beginning of the fourth quarter of the year to November 9. According to HSBC, since then Vietnam has remained the second worst market in Asia in the fourth quarter.

October 2009 witnessed the prosperity of Vietnam’s stock market with the daily trading volume of both the Hanoi and HCM City increasing by 63 percent to 315 million dollar from 193 million dollar in August.

However, HSBC pointed out that within the first five days of November, foreign investors had a net sale of 15 million dollar, a level which much higher than the one million dollar level seen in October.

The sale of foreign investors has led to the decrease in foreign ownership ratio in Vietnam’s stocks to 16 percent from 21 percent in July.

According to HSBC, foreign investors are now making up five percent of daily total trading volume on the market. After the VN Index has been decreasing, losing achievements gained in the fourth quarter, the market now has Asia Commercial Bank’s share (ACB) as the only share item which has the foreign ownership ratio at the ceiling level.

The report made conclusion that in the current context of Vietnam’s weak macroeconomic conditions, foreign investors will not return to the market soon.

The report affirmed that Vietnam’s stocks are now more expensive than stocks in other regional markets. The same conclusion has been repeated continuously in recent reports about Vietnam’s market.

According to HSBC, the current P/E (price to earning ratio) on HCM City bourse is 23.8. If suggesting that the EPS (earnings per share) of the next 12 months is 20 percent, then the P/E of the next 12 months would be 19.1, while the P/E of 2010 would be 15.

HSBC believes that these P/Es are well higher than other regional markets, such as Thailand (P/E of the next 12 months would be 12), China (14.7), Indonesia (14.6) and the Philippines (15).

The banking group said that it recognizes less factors which may foster growth in Vietnam than in other markets. The experts of the banking group have doubts about the recovery of the real estate market in Vietnam.