In its latest Vietnam Monitor report released on July 8, the Hong Kong Shanghai and Banking Corporation (HSBC) said that since the strong growth period began, Vietnamese stocks have become expensive.
Other figures also show the warming up of the market. The market capitalisation value of both the
However, HSBC believes that the most impressive rise was seen in the trading value. The banking group’s report contained figures which show that in June, the daily trading volume of the two bourses reached $166 million on average. Especially, on some days, the total trading volume reached $300 million.
Meanwhile, in lackluster days in February, the daily average trading volume of the two bourses was $13 million only.
According to HSBC, the recovery of
In May, foreign investors were modest investors in
In June, foreign investors’ transactions only accounted for 6.8 percent of the total trading value on Vietnam’s stock market, while the figure was 22 percent last year.
According to HSBC, the dominance of domestic investors in the domestic market with their speculation plans proves to be worrying foreign institutional investors, since domestic investors have pushed stock prices to unattractive levels.
According to HSBC, the P/E of the Vietnamese market is forecast to rise to 15.6, a high level.
The P/E proves to be higher than the projected P/Es in other markets in Asia. In China, for example, the P/E is forecast to be 14.5, while the figures are 10.8 in Thailand and 12.8 in Indonesia.
As the Government’s one-year term bond yield is 8.5 percent and real estate prices have increased again, a lot of domestic investors are considering injecting money in other assets instead of stocks. That explains why June sometimes saw the VN Index decrease to below 500 points.
HSBC believes that with the heavy fluctuations of Vietnam’s stock market, foreign investors should not join the market at this moment.