The Vietnamese economy is estimated to grow 8-8.5 per cent in 2007, Mr Vivek Suri, WB senior economic expert said, assessing Vietnamese economic development over the past six months and prospects for the next six months. The WB also stressed that Vietnam stands out among Asian developing nations (like China and India) in terms of sustainable and firm development.
The WB is optimistic about doubling pledged foreign direct investment (FDI) capital from 2005. Not only pledged investment capital, but also disbursed capital, coupled with foreign indirect investment capital flows (into the stock market) and foreign exchange reserves are sharply rising, Vivek Suri said. According to WB economic experts, the forex reserves of Vietnam reached US$12 billion by the end of 2006 and added another US$3 billion in the initial months of 2007.
The inflation rate in Vietnam fell at the end of 2006 but bounced back in early 2007.
According to the WB, rising inflation is seen in the escalating price hikes of food, foodstuff, and the transport and construction fields. Although inflation has not reached an alarming rate, the WB warned of necessary and timely intervention in the coming time.
In 2006 the state budget trade deficit soared on falling crude oil export. In 2007, according to the WB, the deficit widened because crude oil output has not been increased.
Before the public scepticism about the foreign investment flows into the stock market, Mr Martin Rama, Acting Director of WB in Vietnam, affirmed foreign investors are now investing some US$3.8 billion in both Ho Chi Minh City Securities Trading Centre (HSTC) and Hanoi Securities Trading Centre (HASTC).
However, the investment fluctuates because foreign investors do not pour all their money into transactions on the stock market at one time.
Also regarding the Vietnamese stock market, WB experts discovered that old listed companies usually have slow growth. While newly listed firms rise quickly, because they already have a certain period of transactions on the OTC market.
Concerning overheating stock market development and the high P/E ratio, Mr Vivek Suri said any assessment should be objectively based on economic development.
According to the WB, the P/E ratio on the Vietnamese stock market is higher than that in Singapore, Thailand, Malaysia, the Philippines and South Korea, only lower than China. However, Mr Vivek Suri affirmed that an economy with strong growth normally has a high P/E ratio because of investors’ expectations.
On the Vietnamese stock market, according to Mr Vivek Suri, the prices of several stocks are too high, but other prices match the growth of listed companies. (Pioneer)
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