Volatile market provides chance for overseas investors to cash-in
Global financial markets suffered a dark trading period over the past four days after US Federal Reserve chairman Ben Bernanke indicated the US would scale down its bond buying programme, prompting overseas investors to pull money from emerging markets.
According to data compiled by Bloomberg, foreign investors sold a net US$71.1 million worth of Vietnamese stocks between June 1-25, making it likely to become the biggest monthly sell-off since January 2012.
However, foreign funds are still net buyers this year by a combined amount of $182.7 million, the highest figure since 2010.
Foreign net sells negatively affected the Vietnamese market with the benchmark VN-Index on the HCM City exchange dropping 8.8 per cent this month to reach 473.53 points on Wednesday, while the HNX-Index on the Ha Noi bourse slid 3.7 per cent to 62.24 points.
Nguyen Hoai Nam, deputy head of the analysis department at Maybank Kim Eng Securities Company, still predicted a brighter market outlook, saying this was a temporary phenomenon and prices of Vietnamese stocks were still cheap compared to other regional markets.
"With the price-earnings ratio (P/E) of 14, lower than the Philippines P/E of 18, Viet Nam is still worth investing in the medium term, especially after stock prices on other markets become expensive on the back of recent rallies," Nam told the Dau tu chung khoan (Securities Investment) newspaper.
In recent years, the Vietnamese market has often trailed behind Thailand, Indonesia and the Philippines in luring foreign investment given the nation’s macro economic instability, but Nam expected supportive policies due to be implemented in the coming quarters to swing the economy back on track.
Nam talked up the progress of the national asset management corporation in dealing with banks’ bad debts, the stimulus package worth VND30 trillion ($1.42 billion) to reinvigorate the real estate sector and the likelihood of increased foreign ownership in listed companies.
Meanwhile, Andy Ho, managing director and head of investment at VinaCapital, pointed out potential investment opportunities in bank and property shares given the VN-Index was heading for its lowest level in over a year.
Ho said shares of VinGroup (VIC), the biggest property company listed, lost 9.6 per cent in June and were valued at a record P/E low of 10.8, while the price of Eximbank (EIB) shares had slumped 1.3 per cent with a P/E of 6.9.
"If we look at the long-term view, property and bank stocks are very attractive," Ho said in an interview with Bloomberg, mentioning the Government had been proactive in finding economic solutions.
