How is Vietnam Equity Market?

 

According to the CBV-Indices Research, the listing market pinned high hopes on 50 leading groups and corporations on the CBV-Index. Four reasons leading to the fondness of shares of top groups are prestigious trademark, consecutive growth, expanding size and heightening position in comparison to giant domestic and foreign rivals.

 

Also according to this report, in the first six months of 2007, the entire listed securities market of Vietnam saw 37.77 per cent growth and a risk ratio of 13.79 per cent. The total working market capitalisation of the listing market reached VND218,800 (US$13.67 billion), accounting for 64 per cent of total market value. Particularly, the financial sector took the lead with 28 per cent of total value, followed by consumption service with 13.51 per cent. The oil and gas sector bottomed with 4 per cent. FPT had the largest working market capitalisation of VND29,000 billion (US$1.8 billion), followed by Vinamilk with US$1.2 billion and Sacombank with nearly US$1.1 billion.

 

In July, the market downtrend pushed down the entire market profit ratio by 8.25 per cent and risk ratio of 4.37 per cent. The total working market capitalisation was also down to VND197,000 billion (US$12.31 billion), accounting for 62.5 per cent of the total market capitalisation. The financial sector still led with 32 per cent of the total.

 

According to CBV, with the market movements in July and early August, the securities investment strategy should focus on securities in the CBV-Midcap index, the index for medium-size companies. CBV-Indices Research showed three reasons for this selection:

 

- The January-June profit rate of CBV-MidCap was 28.87 per cent. This growth was not low, as the profit rate of CBV-Total was 39.77 per cent in the period.

 

- In July, when the market fell more strongly, the profit rate of CBV-MidCap was minus 5.18 per cent, while the profit rate of CBV-Total was minus 8.25 per cent, CBV Index minus 8.91 per cent, CBV 20 minus 9.61 per cent and CBV 10 minus 13.14 per cent. This meant that in July, investors enjoyed smaller profits from securities of companies with high market value and high liquidity.

 

- Experience in other securities markets in the world shows that the Market Breadth rule is a popular and important rule with which to make investment decisions. After the first months of 2007, the market breadth of the Vietnamese stock market narrowed. In the middle months of 2007, the market breadth of the Vietnamese listing market was narrow, thus, according to the Market Breadth rule, investment in companies in the CBV-Index brought more profit than in the investment in companies in the CBV-SmallCap. However, share price of companies in the CBV-Index was already high; thus, companies in the CBV-MidCap benefit from the market breadth rule. Investment in CBV-Midcap will generate more profit than investment in CBV SmallCap and CBV Index.