The Hong Kong and Shanghai Banking Corp (HSBC) predicted in the update report April 7 that Vietnam’s stock market index will stand at 600 at the end of this year, much lower than the 1,100-point level it forecast in February.
HSBC has changed its investment viewpoint in Asia in general, and in Vietnam in particular, saying that “Asia is now in a bear market.”
In the report, the British bank advised investors to choose China, Thailand, South Korea and Malaysia markets to invest in, while avoiding Taiwan and Japan. It recommended investment in telecoms, construction staples and health care, but giving away financials, IT, industrials and energy.
In Vietnam, HSBC predicted that the market will face difficulties in short term, but offer good opportunities in long term.
“We expect significant further volatility in the short-term but for investors willing to hold for a year or more, this market is starting to look interesting again,” the bank said, given that the fundamental story of Vietnam as the next major FDI destination is not over.
“We believe value is starting to emerge in the stock market. The 12-month forward PE (based on our assumption of 20 per cent EPS growth this year, following 49 per cent in 2007) has fallen to 12x (compared to a peak of 33x in March 2007).”
However, HSBC revised the forecast about Vietnam key index at 600 by late 2008 and 750 by late 2009, down from 1,100 and 1,300 respectively as in the previous report.
The bank said the Vietnamese authorities have made a curve monetary policy, a confusing currency policy and ill-considered measures to prop up the market, which have caused the Vietnam index to crash 45 per cent in the first quarter.
In contrary with this report, HSBC in March listed Vietnam among top six investment destinations in Asia, beside South Korea, China, India, Singapore and Thailand. (Vietnam Economic Times, Cafef)
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