Saigon Securities Inc (SSI) on Monday announced a report on potential of Vietnam’s stock market in 2010. SSI analysts are however cautious while forecasting the post-crisis economy in 2010 as the macro-economic policies can be changed to reach the 2010 GDP growth target of 6.5% and curb inflation at 7%.
As per the report, the credit market will become sustainable in Q2 and Q3 and return to the tense status when the big-sized bond issues breaks out, which will reduce the liquidity of banking system. By that time, basic rate could be raised to the highest level of 10% by late 2010. Meanwhile, the stock market could start a sustainable growth period and inflation will show sustainability signals.
In the list of shares subject to SSI's research, 2010 Price to Earnings (P/E) ratio of the stock market will average at 11 times while the EPS growth in 2010 will be -7%. Stock players should consider investment in such fields of banking, basic consumer goods, seafood, natural rubber, information technology, and real estate.
* Banking sector: State Bank of Vietnam recently approved commercial banks to apply interest rates based on negotiations on medium and long-term loans, so the banks’ revenue from loan rates can increase thanks to sustainable credit growth and surges in marginal profit. But a rise in lending rates could make lower the borrowing demand and the government could issue the credit tightening up policies towards the goal of curbing 2010 credit growth at 25% and inflation at 7%. Bank shares are good option for long-term investment, typically STB of Sacombank and VCB of Vietcombank.
* Construction material production: the government has given priorities to develop infrastructure to attract long-term foreign investment so the demand for construction materials in this year is expected to be very high. However, enterprises will have to make big efforts to join the tenser competition and spend much on fixed cost.
* Roof tile: the government is step by step deleting backward production facilities, leading to the potential shortage of granite in domestic and global market. However, these producers will have to suffer from high loan rates and limits in the government’s investment in this sector. SSI proposed investors to pump capital in the codes of VHL, DTC and VIT.
* Food and brewery industry: the dairy industry could grow by 15-20%, confectionery 10-15%, vegetable oil up at least 10% thanks to increasing retail prices and a surge in consumption demand. The imported milk products continue losing position against domestic brand names in Vietnamese market.
In addition, according SSI’s proposal, investors should pour capital into VSH (electricity sector), HVG, MPC and ABT (seafood processing), DMC and IMP (pharmaceutical sector), SJS, DIG, BCI and ITC (property sector), GMD and VSC (port logistic), FPT (technology).
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