One of the last frontier markets to emerge in Asia, we see Vietnam as a ten-year buy.
- Merrill Lynch strategy report, February 2006
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:: Vietnam Stock Markets ::
HOSE - Ho Chi Minh Stock Exchange
HASTC - Hanoi Stock Trading Center
:: Vietnam Stock Brokers ::
Ho Chi Minh City Securities - HSC
:: Vietnam Funds ::
:: Vietnam Stock News ::
Recently I've read in some VN newspapers an article name like this blog title. It warns the VN stock market is experiencing its worst since the second half of year 2006. And once again this kind of report is released by a wellknown international financial institution : Merrill Lynch.
I do not have the original report (so anyone here have it please share to others via here ^^)
This is not the first time int' financial institutions made their suggestions on the trend of the VN stock market and provided some "advices" to investors.
Though some would not agree totally with those reports (largely because the "notorious and dubious" HSBC reports recently), I think we would consider:
- P/E is so high. Though P/E is not the only one that counts when considering investment indexes, the P/E average of the market of above 30 is relatively high compared with other markets. This is due to : (1) Overestimate and overevaluate by the individual investors. (2) Companies are issuing new stocks in a "careless" manner. They only take into account of how much they will raise after the issuance, but not of whether it could lead to a decline in the P/E.
The high P/E also helps explain why the EPS (Earnings per share) in Vietnam is relatively low compared with other markets. 'Cause company are ALL choosing SHARE ISSUANCE as first priority instead of BANK LOAN. (with an unchanged capability to make profit while the equity capital keeps raising, the result of a decreasing EPS is obvious)
- Most companies listed on the stock market now are restructuring their portfolios: expanding into sectors like real estate investment. Again, real estate is a longterm investment in which the companies will not see their capital return for the next 2 - 3 years until the constructions complete. ---> In short term, 1 to 2 years, the share price mustnt be as high.
- The VN stock market, I think, has now been more "organized" than previous 1 year. With individual investors now more aware of the win-loss of the market and more and more billiondollar funds have stepped into the market, it's now moving in a more easily predictable way. (Institutional investors have always been thinking that share price is too high)
- The VN stockmaket has never had the "routine" of considering Gross economy status. But now, Inflation has gone far beyond the Gov expectations, and the contractionary monetary policies from the SBV are factors that can impose a heavy negative influence on the Market.
- Those kind of reports, more or less, have effects on investors sentiments - in a downward way.
I strongly expect the market to keep falling to an "acceptable" price. Perhaps P/E 20- 25, in my opinion, is fine.
But the invest prospect in Vietnam is still bright, not gloomy. Billion dollars r waiting to flow into the market. So for medium term, demand would raise significantly, and the market, in turn, would soon recover ^^.
Merrill, read it and weep
Got it!
The Merrill report that has inspired so many headlines and so much grief in the market, read it and weep.
It has very little to say on Vietnam really, but for those who are interested I will post excerpts and even the FULL REPORT.
Follow this link:
Merrill Lynch Report (Yawn!)
Merril report
I still have not seen the Merrill report and the information so far seems sketchy.
But for those wanting more, here is one from Vietnam News:
VN-Index lynched by gloomy report
Mad Cows & Armchair analysts
Another one from VN news on this topic...
And yes I still think the HSBC report has been generally misread and they are being unfairly blamed.
While the Merrill report does seem to be more negative, still, come on and GROW UP people! This is just one analyst's opinion. Analysts are wrong about as much as they are right. They have no crystal ball. So get over it and make your own decision.
If you think Merrill is wrong, then put your money where your mouth is and go out and BUY!
THAT is how you make money, but being disciplined and sticking to your guns, NOT by following the herd.
But then I have already ranted on this topic at least once: HSBC: Much ado about nothing
Armchair analysts, herd mentality jerk market
HA NOI — Stock market investors are decrying the pernicious influence of foreign financial analysts’ dire predictions of gloom and doom on the performance of the market.
HSBC’s prediction that the VN Index would drop to 900 by the end of the year wreaked havoc in trading on July 2. That day, the market closed with the Index below 1,000, a decline partly attributed to the HSBC report.
However, investors who had not sold shares on July 2 breathed a sigh of relief on July 3 and 4 when both the VN Index and HaSTC index strongly recovered.
Many were also angry because they had believed the forecast and bargained away their shares, losing a lot of money.
Investors once again were dismayed when Merrill Lynch recently released its investment strategy for the Asian Pacific region in 2007 which said that the company would "reduce its asset allocation to zero in Viet Nam and use it to fund a mild overweight in China."
According to Merrill Lynch, a 1,000-point VN Index was psychological support with little substance to back it.
Investors weren’t sure whether to cut or play.
Dang Vu Hai, an investor in HCM City, said that he was not only tired of unreliable information about the Vietnamese stock market but also afraid of official information.
Nguyen Thuy Nga, a customer of Asia Commercial Bank, said, "Information on the websites of listed companies and of the two stock exchanges, especially the State Securities Commission, always is uploaded more slowly than the spreading speed of information on the bourse. Thus, we often have to search for information ourselves on forums or securities websites created by individuals, and risk being misled."
Tran Hoang Thang, an information analyst for a foreign fund, said that it was also investors’ fault because they did not check the veracity of information and traded following the crowd.
Nevertheless, the State Securities Commission should have penalties in place for provision of wrong information and investigate the motive for the provision, he added.
"It is clear that information that has not been checked but is issued at a vulnerable time will cause difficulties and losses to Vietnamese investors," said Bui Quang Hoan, chairman of Van An Sinh Co.
The stock market was very sensitive to information, especially in Viet Nam. where trading still depended on the herd mentality, he said.
Armchair analysts, herd mentality jerk market
Still a 10-year buy?
http://www.vnexpress.net/Vietnam/Kinh-doanh/Chung-khoan/2007/07/3B9F8250/
Wonder how the market will react?