Hanoi Analyst sees value in Viet Nam stocks

Hanoi Analyst sees value in Viet Nam stocks : Foreigners have begun taking notice of Viet Nam's stock market again, says Tony D'Altorio, a research analyst with Investment U, a US online financial publication.mOverseas investors' share of daily trading volume on the nation's stock exchanges had jumped to 15-20 per cent over the past couple months, D'Altorio noted in his article entitled "Viet Nam's emerging market: an Asian value play".

Foreign investors might believe that Vietnamese stocks were cheap currently in comparison to the rest of Southeast Asia, D'Altorio said, acknowledging that Viet Nam remained at bargain basement prices among Asian countries. Citing PXP Asset Management research, he said that Viet Nam's market was trading on a price-to-earnings ratio of 10.6, compared to Thailand's 14.4, Indonesia's 17.4 and the Philippines' 18.6.

"Since Viet Nam's market first hit global investors' radar screens in 2006, it has traded between 8 and 35 times earnings. So it's definitely trading near the low end right now," D'Altorio said.

The benchmark VN-Index had already fallen 14 per cent this year on inflation concerns, a weakening currency and a sizeable trade deficit, D'Altorio wrote. "To be sure, stocks are probably unfairly marked down right now," he added. "And while there aren't any quick bucks to be made off Viet Nam right now, patient value investors can do quite well all the same."

‘Hot money' pouring into Viet Nam from foreign sources wouldn't be a concern due to analyst concerns on inflation and monetary system, as well as the size of the market, which has only eight stocks with market capitalisation in excess of US$1 billion.

D'Altorio recommended buying in through MarketVectors Viet Nam, a fund traded on the New York Stock Exchange under the code VNM that was 68-per-cent invested directly in Vietnamese companies. The remainder was then invested into companies worldwide that were doing significant business in Viet Nam.

D'Altorio also noted that foreign investors continued to wait on the Vietnamese Government to become more serious about reforming State-owned enterprises. Corporate governance and poor financial reporting standards weren't helping, nor were the worryingly high tolerance for debt among management, he said. For the latest updates PRESS CTR + D or visit Stock Market news Today

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