HSBC Stays Bearish on Vietnam Equities
HSBC said in its Vietnam Monitor issue 26 that it stays bearish on the Southeast Asian country’s equities as they see fewer growth catalysts, and the liquidity is still a concern for most foreign investors.
Jacqueline Tse, HSBC’s equity analyst pointed out that VN-Index has been the second worst Asian market with a quarter-to-date loss of 8% (12 Nov) and the market 12 month forward price to earning ratio is at 19x, higher than other Asian countries (China at 14.7x).
Jacqueline Tse saw the drop of the foreign ownership to 16% from 21% in July, their proportion of the total turnover lingers around the low level of 5% and does not expect foreign investors to return amid the weak macro fundamentals.
Jacqueline Tse also saw profit taking activities are coming to an end as the strength of liquidity seems to be leveling off already from the peak of $315 million a day in October.
However, he saw a positive outlook for Vietnam’s market as Lunar New Year, or “Tet” is nearing. “The next positive news might potentially be the New Year Holidays, when consumption and export demand for foodstuff and agricultural commodities pick up.” HSBC reported.
“But between now and then, we do not anticipate much supporting news in Vietnam that justifies investors entering the market at a valuation premium over other more promising markets,” Jacqueline Tse said skeptically. (Vietnam Monitor)
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