Key Factors Affecting Local Stock Market In 2010: BIDV Securities
BIDV Securities Ltd. (BSC) has published a report looking at key factors affecting Vietnam stock market and gave an outlook for the market in 2010.
The first factor is the government monetary policy which will affect money flows in the stock market. BSC said the tightening monetary policy in the first quarter to curb inflation, trade imbalance and narrow budget deficits have limited inflows.
Securities investment funding will be watched closely in 2010 because the government makes priority to fund production enterprises and key projects. However, monetary policy will be likely to relax in the second half to pursue economic growth target, BSC said.
Secondly, companies are expected to face higher operational costs because the government cut down its subsidies for lending and ended a 30% corporate income tax reduction.
Companies will unlikely post higher returns on equity (ROE) or surprising earnings but to have lower earnings per shares (EPS) as a result of raising registered capital, the broker said.
BSC expected the corporate performance will be better in the second half due to higher sales revenues and liquidity.
GDP growth rate is the third factor effecting the stock market. BSC is quite positive about the economy development and expected GDP growth rate at above 6% this year.
Inflation, possible dong devaluation, trade deficit are the other factors which will have negative impact on the stock market, the broker said.
Considering the expected EPS and P/E in various economic scenarios, BSC forecast the benchmark VN Index to reach 620-650 in the worse scenario and 720-750 in the best one. (BSC March)
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