Vietnam’s stock market will roar back in the first half of the year on the US’s bullish market, financial experts expect.
The stock market in Vietnam last year were effected by many macroeconomic factors, while nearby markets including Singapore, Indonesia and Thailand were boosted by the US’s financial bailouts, said M.A. Le Dat Chi, head of the financial investment faculty of the University of Economics Ho Chi Minh City.
“A part of the US$600 billion bailout of the US flew into Asian markets, especially emerging ones. It was just a small proportion for the US market, but it did make big impact to emerging markets, except of Vietnam,” Tri said.
Only investors holding control stake in listed enterprises made profits from dividends as the VN-Index dropped to 430 points in the last quarter of last year, with many shares slumping to incredible levels, he said.
“Vietnam’s stock market is at the bottom, with the ratio of dividends per share equal to 15 percent. This rate is extremely attractive to some investment funds,” the economist said.
“Besides, investors’ confidence in a successful Eleventh Party Congress with new members elected into the central committee will boost the market sentiment. Foreign investments will flow stronger into the stock market, which hit the bottom. Therefore, the market will likely to roar back in 2011.”
Statistics showed nearly the foreign indirect investments (FII) pour into the stock market last year reached $1 billion. Stabilizing the foreign exchange rate should be the top priority this year to attract more FII, Tri noticed.
The financial expert also recommended that more adequate taxes on shares will attract more foreign investors.
“Instead of asking foreigners either to pay security before entering the market or not to sell shares in at least one year, we can impose taxes on the dividend from their share investments,” he suggested
Stock market analysts also predict the market will likely to recover strongly in the first half of the year on the increase of the US market.
“The US dollar getting weaker in the first half of 2011 will be good news for the country’s stock market. However, it will be stronger again in the last half. The market’s winning run will likely to last until June, with Dow Jones Index climbing 12,600 points,” Tri said.
Statistics showed the stock market usually climbs up in March, April and December every year.
However, the market is still carrying some risks including the US dollar getting stronger constantly, warned Pham Xuan Anh, deputy head of the brokerage BIDV-BSC’s market analysis unit.
“Standard Chartered Bank expected the foreign exchange of Vietnam dong and dollar will reach VND20,800 per dollar at the end of the year, a year-on-year increase of around 6.6 percent,” said Tri.
“The Asia Development Bank last September predicted Vietnam’s inflation in 2010 would rise to 7.5 percent, caused by a weakening dong and an increase in food prices.”
Low foreign currency reserve and large amounts of dollar and gold owned by residents would put the central bank in difficult time, Tri added.