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Stocks to rise further, predict leading brokers   2008-08-25 - ThanhNienNews

Vietnam’s stock market may extend a rally that will push the VN-Index to around 600 points by the year end, if the decrease in the pace of inflation is maintained and GDP growth remains stable, leading brokers say.



Nguyen Duy Hung, chief executive officer of Saigon Securities Inc., the country’s largest brokerage firm, and Pham Duc Thang, General Director of the Sao Viet Securities Company, are agreed that the benchmark index, the gauge of 156 leading firms and four closed-end funds listed on the Ho Chi Minh Stock Exchange, is likely to increase to the 600 level from 366.02 points on June 20.

Ngo Huu Hung, who heads the analysis department of the Dai Viet Securities Company, also concurs: “The market will vary from 500 to 600 points from now to the year-end.”

The rise in index is only possible if GDP growth reaches the 7 percent target set by the government, and inflation stands at below 30 percent this year, cautioned Hung from Saigon Securities Inc.

The General Statistics Office has reported a year-on-year inflation hike of 21.28 percent in the first seven months of this year, and a GDP growth of 6.5 percent.

However, the market may be affected by sudden changes in oil and gold prices, and the slowdown of the global economy which has not passed the difficult period yet, says Thang.

The remaining part of the year presents big opportunities for investors, but these are accompanied by many risks, notes Dai Viet’s Hung.

The market will change when investors sell stocks for quick profits as trading bands widen, he feels.

On August 18, Vietnam widened the dailystock trading band to 5 percent from 3 percent on the Ho Chi Minh Stock Exchange, and to 7 percent from 4 percent at the Hanoi Securities Trading Center.

Hung advises investment in companies with stable business performance, rational debt-capital structure and qualified management boards.

It is also important to assess the real value of stocks as many of them have increased too much recently.

Declining gas prices, stable foreign exchange rates and lower interest rates have allayed fears of rising inflation, and seen the country’s stock market rebound.

The VN-Index jumped 23 percent to 526.98 points on August 22 from 429 points a month ago.

HASTC-Index also surged 52 percent to 164.28 points on August 22 from 107.76 points on June 10.

In the middle of this month, Vietnam lowered gasoline retail prices to VND18,000 (US$1.09) per liter from VND19,000 ($1.15) per liter.

The exchange rate was also stable at around VND16,500 to the dollar.

Last week, the annual lending rates of state-owned commercial banks decreased by 0.1 percentage points in U.S. dollars and 0.15-0.18 percentage points in Vietnamese dong, according to the State Bank of Vietnam.

The consumer price index (CPI) in August is set to rise over the July figure by 2.09 percent in Ho Chi Minh City and 1.92 percent in Hanoi, according to the General Statistics Office.

The country’s CPI rose 1.13 percent in July over June, the lowest increase since early this year, compared with increases of 2.14 percent and 3.91 percent in June and May respectively.

The liquidity of stocks has improved remarkably, as average daily trading value exceeded VND1 trillion ($60.61 million) last week.

The week’s total trading value soared 157 percent to VND5.2 trillion ($315.15 million) over the previous week as 134 million shares changed hands, up by 146 percent.

The officials from the three brokerage firms feel the hardest period for the stock market has passed, but the economy still faces difficulties and the inflation rate has remained high.

“Firms will encounter challenges in remaining months of this year, when the government’s tightened monetary policies start to have effects, and enterprises face thinner stockpiles of low-priced goods,” warns Hung.

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