Financial analysts believe that the stock market will prosper again in the time to come after businesses announce positive half-year business results, and the monetary policy is loosened.
On June 14, encouraged by the good macroeconomic performance, stock indexes increased slightly for the fifth consecutive trading session. The VN Index increased to 508.32 points, rising by 0.8 percent, HNX Index surged to 159.76 points, climbing by 0.97 percent over the previous trading session. The total trading volume was 2560 billion dong.
Good economic performance expected
At a recent workshop held in HCM City, the General Director of HSBC Vietnam predicted that Vietnam’s GDP growth rate in 2010 would reach 7.2 percent. This forecast seems to be reliable, because many have predicted high economic growth rates for their areas. Hanoi, for example, believes that its GDP growth rate will reach 10.1 percent for the first six months of 2010.
Enterprises have not released their business result for the first six months yet, but the 5-month business reports are satisfactory and analysts believe that many will have profits much higher than that of the same period of 2009.
Companies in the fields of construction materials, rubber, real estate, pharmacy and food all have good business strategies and high growth rates. However, the prices of their stocks remain low because investors have been influenced by the ups and downs in recent trading sessions. It is estimated that the P/E (price to earning ratio) is low at 5-6x only,
Interest rates will drop
Leaders of the State Bank of Vietnam (SBV) met representatives from Vietnam Banking Association and commercial banks late last week to discuss the Government’s instruction on lowering interest rates.
DBV Deputy Governor Nguyen Dong Tien affirmed that the central bank will take necessary measures to ease interest rates. Tien explained that reasonable interest rates now are 10 percent for deposits and 12 percent for loans. In order to do this, the central bank will apply flexible monetary policy tools to support banks in lowering interest rates
Financial analysts forecast that banks will lower their rates, but they need more time to use up the capital they mobilised at high interest rates.
Time to buy shares
Though the stock prices have been increasing over the last five trading sessions, liquidity remains low. Sellers do not want to bargain away their holdings, while buyers want to invest money step by step and buy shares gradually.
Huynh Anh Tuan, Director of SJC Securities Company, commented that the European debts crisis is over, while macroeconomic indexes are improving (Low inflation rates, high GDP growth rate, stable monetary market, good business result of enterprises, decreasing bank interest rates). All these factors seem to support theories that conclude stock prices will rise. The analysts believe that, in July, when both businesses results for the first six months of 2010 are revealed and the monetary policy is loosened, the stock market will prosper again.