US newswire investmentu.com is recommending investors to consider buying Vietnamese securities since “Vietnamese stocks should pay out nicely… for those with a little patience”.
While the newswire stock expert Karim Rahemtulla last month included Vietnam to the list of several highlighted countries likely to spearhead the next emerging market wave, another expert of the newswire, Tony D’Altorio, cited Vietnam most certainly is a fast-growing emerging market since its stock market trades at such impressive levels.
Tony D’Altorio quoted Mark Mobius, an emerging market investor who had called the country’s stock market one of the world’s “cheapest”, admitting to “finding lots of bargains” for his Templeton Asset Management funds, which are well known as value investments.
Stock markets across Asia have shot up on hot money flows from western investors. But Vietnam remains at bargain basement prices, said the newswire.
Its benchmark VN index already fell 14 percent this year on inflation concerns, a weakening currency and a sizeable trade deficit. That leaves it still 67 percent below its 2007, all-time high.
Right after hitting that record, inflation began spiraling upward and global financial turmoil sent foreign investors running for cover. Most of them haven’t gone back since Vietnam’s investment bubble blew later that year.
So its stocks remain among the cheapest in Asia today, the newswire summed up.
Despite some issues, including small market size with capitalization over $1 billion, corporate governance abuse and poor financial reporting standards, macroeconomic instability with double-digit inflation and low FX reserves, outsiders have begun noticing Vietnam’s stock market again.
According to PXP Asset Management, Vietnam’s market is trading on a 2010 forecast price-to-earnings ratio of 10.6, compared to 14.1, 17.4 and 18.6 in Thailand, Indonesia and the Philippines.
Vietnam’s economy is forecast to grow at the third-fastest pace in Asia, after China and India, so companies expect an average 27 percent growth in earnings per share.
Bill Stoops, chief investment officer of Dragon Capital told the newswire that the market has come down a lot but earnings have been holding up.
Foreign trading volume picked up over the past few months from its two-year, daily average of 5 percent. Over the past couple months, overseas investors’ share of the daily trading volume jumped to 15-20 percent.
Perhaps they believe Vietnamese stocks are just too cheap compared to the rest of Southeast Asia. Or maybe they expect the local government to become serious about reforming its state-owned firms.
To be sure, those stocks are probably unfairly marked down right now. And while there aren’t any quick bucks to be made off Vietnam right now, patient value investors can do quite well all the same.
Better yet, there’s an easy way to buy it up through MarketVectors Vietnam (NYSE: VNM).
The ETF has about 68 percent invested directly in Vietnamese companies. It then divides the remainder into companies around the globe that do significant business in Vietnam.
In its latest Vietnam report last month, HSBC Bank also believed that Vietnam's stock market is likely to prosper in 2011.
Unlike Vietnam Monitor recently, in which HSBC used to say Vietnam's stocks more expensive compared to other markets in the region, in this Insight Vietnam, HSBC's analysts “believed that it is time to have a different look at Vietnam's stock.”
HSBC assessed that, with the rise of share prices in most other markets, the Vietnam market has begun to "return to the radar screen" of international investors.
HSBC offered five reasons to prove to the opportunities that Vietnam's stock market can bring.
They included the prospect of Vietnam's robust GDP growth of 7.1 percent in 2011, the active market reform and legal gap promotion, the step-up in equitization of state-owned firms and reasonable share prices in Vietnam.
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