Tiếng Việt
普通话
The year 2012 seems to be shaping up as Vietnam’s comeback year, as it slowly regains its place on investors’ lists of favored emerging nations.
The nation’s benchmark VN Index of 302 stocks rose another 2.7% on Tuesday, bringing its gain so far this year to 18%. But it was starting off from a loss of 27% for 2011.
According to Bloomberg data, the index is now trading at a modest multiple of 8.65, compared with a record-low multiple of 6.9% of estimated profits as of Jan. 10.
Market Vectors Vietnam (VNM) the exchange-traded fund (or ETF) that focuses on the country, also is climbing this year, from about $14 at the start of 2012 to a close of $18.55 on Wednesday.
Upbeat projections are rolling in. “We expect a bigger and more sustainable stock rally in the second and third quarter when inflation is expected to reach single digits,” Dominic Scriven, manager of Dragon Capital’s Vietnam Growth Fund, told Bloomberg.
Michel Tosto, of Viet Capital Securities, told the business news site Finance Asia that Vietnam’s low labor costs, and its low-priced goods, should remain competitive compared to those of China as the global slowdown in growth continues. Consumer sector goods and services are his firm’s top picks.
Also this week, the bank HSBC issued an optimistic report on Vietnam’s current economic status. It said the nation’s gross domestic product rose 5.9% in 2011, and projected its growth in 2012 at 5.7%.
Finally, CITI Analysts Andrew Howell and Maria Gratsova are quoted by a Vietnamese site as saying that Vietnam stock pickers may still have a “volatile ride” ahead, but that Vietnam should be “a core frontier holding” for emerging market investors.
All of this optimism stems from the apparently successful efforts by Vietnam’s government to force the nation’s runaway inflation rate down without derailing its economic growth. The inflation rate has steadily declined for the past five months, from about 20% to 17.23% in January. Further declines to 10% to 12% by the end of the year are expected. That trend is expected to lead to easier credit terms for businesses and consumers.