Securities brokerage warns of too high supply by year end

VNStockNews.com - During the last nearly two weeks, the VN-Index of the Ho Chi Minh Stock Exchange (HOSE) lost 13.5% or 84.5 points. It is predicted that the market will continue going down this month. Meanwhile, with the more optimistic vision, some specialists said that the market still has chance to grow.

After an 8-month point-increasing chain, the market in October is facing new pressures. The world's stock market performed good growth steps last month but now is dipping when US people are worried about the economic recovery, which affected strongly to Vietnamese stock players and resulted in the reduction of VN Index between October end and November early.

In addition, the credit growth to date has exceeded the target, causing the fears in money supply to the stock market. Till October 30, total outstanding loans jumped 33.29 percent from last December, surpassing 3.29 percent of the full year's 30 percent plan. As a result, State Bank of Vietnam could apply credit tightening-up measures and the capital supply (mainly from banks through financial lever or consumer loans) to securities investors will be limited.

Using the financial lever, according to Le Anh Thi-vice general director of Au Viet Securities Co, supported well the increasing impetus of the stock market in September and October, bringing the trading value to the new record of over nine trillion dong on both bourses and helping VN Index surpass the 600-mark threshold.

As analysed by Rong Viet (Viet Dragon) Securities Co, in last two months of 2009 there will be nearly 30 million shares worth 1.217 trillion dong listed on two stock floors along with 1.4 billion dong worth of additionally issued shares. The share supply will increase sharply in the near future. If no money is pumped, the market will have to suffer a heavier pressure because of too high supply.

As estimated, the country's economy growth could reach 5-5.2 percent this year and 6.5 percent in 2010. Even some economic institutions forecast that the real growth rate could be higher. Standard Chartered Bank lifted the economic growth of Vietnam from 5 to 6.7 percent for 2010 and from 6 to 7.2 percent for 2011 while Credit Suisse predicts Vietnam's 2010 GDP growth at 8.5 percent.

Adding the second demand stimulus package, in the point of view of Dr Pham Do Chi, will be a suitable step because the first one had helped many enterprises escape from the losses in the end of 2008.

Total 9-month profit of the whole stock market, as calculated by Viet Dragon SC, grew by 30.7 percent year-on-year, making P/E ratio of October end fall month on month.

With the P/E ratio of latest four quarters of 14 times, the Vietnamese stock market is more attractive than regional countries as for new investors, Le Anh Thi said.