Recovery holds key to market growth

HA NOI — "Sound economic prospects in 2010 will be vital for sustainable development of the stock market," said Ha Huy Tuan, deputy director of the National Financial Supervisory Committee, at a conference on investment and business opportunities held here on Thursday by Investment Review and the Ministry of Planning and Investment.

"The VN-Index is likely to grow to 650-700 points by the end of this year," VinaSecurities Co chairman Hunt Macnguyen said at the conference.

"The stock market could reach a growth rate of 15-20 per cent over the next two years," he added, noting that the central bank had set a credit growth target for banks this year of 25 per cent, tight enough to prevent a "bubble" but also loose enough to feed stock market growth.

Bond rates were also likely to remain low, causing investors to seek more lucrative opportunities in securities, he suggested.

Meanwhile, the global economic recovery would likely give a boost to Vietnamese exports, improving on last year’s US$12 billion trade deficit, which had amounted to 13 per cent of GDP in 2009.

Remittance from abroad, one of three leading sources of foreign currency in the Vietnamese economy, were also projected to increase to $6.3 billion this year.

Based on such economic figures, the nation’s stock market was likely to be competitive with others in the region, Macnguyen said.

"The average price-to-earnings ratio of shares on the Viet Nam stock market stands at 12-13, which is rather low compared to the ratio of 15-20 in other emerging markets", agreed VTG Finance Co vice chairman and general director Lam Minh Chanh.

The domestic stock market has developed significantly, as was reflected in growing market liquidity and regular corrections that were keeping the market from overheating, Chanh said.

But, Macnguyen noted, the liquidity problems facing commercial banks might continue to be an obstacle to looser credit for enterprises, a factor that, together with higher raw materials prices, could slow business growth this year. — VNS