Investors in a bet on Vietnamese stocks
Global investors have set their sight on Vietnamese stocks which have been outperforming their regional peers in the recent past but, according to analysts, still have plenty or room upward.
Despite a 15-per cent gain in the VN Index has led to an outperformance versus the MSCI Frontier Markets Index and the South East Asia benchmark gauge, it is expected to still climb higher.
“There is room to grow,” Dominic Scriven, Ho Chi Minh City-based Chairman at Dragon Capital, tells Bloomberg News, adding that “we are looking for 19 per cent net growth in earnings next year.”
The strong premium this year was “due to Vietnam good macroeconomic performance and political stability, while the rest of the region went through political transformations and tougher economic times,” said Attila Vajda, managing director at Project Asia Research and Consulting Pte in Ho Chi Minh City.
Economists predict Vietnam will be among the world’s fastest-growing economies in 2016 as it benefits from a manufacturing industry that has grown in importance over the years. Increased foreign direct investment helped push the VN Index to an eight-year high of 688.89 on October 19. The government aims for GDP growth of 6.7 per cent in 2017, which will be the fastest pace since 2007.
Most promising new listings are Saigon Beer Alcohol Beverage Corp. and Hanoi Beer Alcohol Beverage Corp, Vietnam Dairy Products JSC, Vietnam Airlines Corp. and Vietnam National Textile and Garment Group, or Vinatex, among others.
The Vietnam stock index was also able to overtake the Philippine index after Philippine President Rodrigo Duterte, elected earlier this year, unnerved investors with his frequent outbursts against the US and violent war on drugs. It also set itself clearly ahead of Thailand’s stock index which never really has recovered since the 2014 coup d’etat.
However, there are two elements of uncertainty for investors, one being the low market liquidity in the banking sector which could be changed by the Vietnam government raising the foreign ownership threshold in banks from currently 30 per cent.
The average daily turnover on the Ho Chi Minh City Stock Exchange – the main bourse – was just $109 million this year, compared with $768 million in Singapore, according to data compiled by Bloomberg.
The other issue is trade barriers: Vietnam, which would have been the biggest beneficiary of the Trans-Pacific Partnership, may stand to lose the most as US President-elect Donald Trump has signaled to abandon the pact.
Global investors have set their sight on Vietnamese stocks which have been outperforming their regional peers in the recent past but, according to analysts, still have plenty or room upward. Despite a 15-per cent gain in the VN Index has led to an outperformance versus the MSCI Frontier Markets Index and the South East Asia benchmark gauge, it is expected to still climb higher. “There is room to grow,” Dominic Scriven, Ho Chi Minh City-based Chairman at Dragon Capital, tells Bloomberg News, adding that "we are looking for 19 per cent net growth in earnings next year." The strong premium...
Global investors have set their sight on Vietnamese stocks which have been outperforming their regional peers in the recent past but, according to analysts, still have plenty or room upward.
Despite a 15-per cent gain in the VN Index has led to an outperformance versus the MSCI Frontier Markets Index and the South East Asia benchmark gauge, it is expected to still climb higher.
“There is room to grow,” Dominic Scriven, Ho Chi Minh City-based Chairman at Dragon Capital, tells Bloomberg News, adding that “we are looking for 19 per cent net growth in earnings next year.”
The strong premium this year was “due to Vietnam good macroeconomic performance and political stability, while the rest of the region went through political transformations and tougher economic times,” said Attila Vajda, managing director at Project Asia Research and Consulting Pte in Ho Chi Minh City.
Economists predict Vietnam will be among the world’s fastest-growing economies in 2016 as it benefits from a manufacturing industry that has grown in importance over the years. Increased foreign direct investment helped push the VN Index to an eight-year high of 688.89 on October 19. The government aims for GDP growth of 6.7 per cent in 2017, which will be the fastest pace since 2007.
Most promising new listings are Saigon Beer Alcohol Beverage Corp. and Hanoi Beer Alcohol Beverage Corp, Vietnam Dairy Products JSC, Vietnam Airlines Corp. and Vietnam National Textile and Garment Group, or Vinatex, among others.
The Vietnam stock index was also able to overtake the Philippine index after Philippine President Rodrigo Duterte, elected earlier this year, unnerved investors with his frequent outbursts against the US and violent war on drugs. It also set itself clearly ahead of Thailand’s stock index which never really has recovered since the 2014 coup d’etat.
However, there are two elements of uncertainty for investors, one being the low market liquidity in the banking sector which could be changed by the Vietnam government raising the foreign ownership threshold in banks from currently 30 per cent.
The average daily turnover on the Ho Chi Minh City Stock Exchange – the main bourse – was just $109 million this year, compared with $768 million in Singapore, according to data compiled by Bloomberg.
The other issue is trade barriers: Vietnam, which would have been the biggest beneficiary of the Trans-Pacific Partnership, may stand to lose the most as US President-elect Donald Trump has signaled to abandon the pact.
