A Sabeco's brewery plant in the central province of Quang Ngai. The company shares have lost a total of 45 per cent in the last seven weeks. — Photo baoquangngai.vn
Though Vietnamese shares have lost a lot in the past seven weeks, analysts and securities firms are unsure if it is now the right time for buying in.
The benchmark VN-Index on the Ho Chi Minh Stock Exchange last week dropped a total of 5.07 per cent to hit its three-year low of 709.73 points.
The VN-Index has tumbled a total of 28.4 per cent since January 30 when the market returned from the Tet (Lunar’s New Year) holiday and the coronavirus pandemic was first emerged in China.
Dozens of billions of dollar have been wiped out from the market’s total valuation as large-cap companies such as brewer Sabeco (SAB), insurer Bao Viet (BVH), steel producer Hoa Phat (HPG), and Vingroup (VIC) have seen their share prices plummet in seven weeks as market sentiment hit the bottom and foreign investors sold off their assets.
Since January 30, foreign investors have offloaded a total net value of more than VND10 trillion worth of local shares.
Shares of Sabeco have tumbled 45 per cent, shares of Bao Viet have lost 48 per cent, shares of Hoa Phat have declined by 29 per cent, and shares of Vingroup have fallen 28 per cent.
During the period, average he price-to-earnings per share (P/E) ratio of the Vietnamese stock market has dropped to 13x-14x from 16x recorded at the beginning of the year, according to securities firms.
That means Vietnamese shares have got cheaper and investors will normally feel it is now a good time to pour money in the market.
“I don’t think it is a good idea to buy in stocks right now,” individual investor Tran Hoai Nam told Viet Nam News.
The coronavirus pandemic COVID-19 has put the whole global economy on halt. “I think we have to re-define what ‘good condition’ is,” Nam said.
Nam feared a huge number of businesses would be suffering and banks would have to record a huge amount of bad debts in the financial statements.
“The impact of the pandemic on Vietnamese economy is unmeasurable, so Vietnamese shares may keep falling in the short term,” Nam said.
International media has forecast buying risky assets now is a tricky proposition.
Latest movements of central banks across the globe to pump trillions of dollars to stabilise the financial system seem not enough to boost market sentiment for investors, especially foreign ones, according to Sai Gon-Ha Noi Securities Co (SHS).
“Cash is king” is now the advice that securities firms are giving to their clients. Investors should hold on to cash and those that have already bargained should watch the market closely, SHS wrote in its weekly report.
“It is too soon to say the market has reached the bottom as we are still seeing unpredictable developments of the pandemic in the Europe and US,” Tran Duc Anh, director of macroeconomics and market strategy at KB Securities Vietnam Co, told tinnhanhchungkhoan.vn.
“The speed, the timing and the impact of COVID-19 on the global economy is something unpredictable and we have to prepare for a much worse scenario,” Anh said.
If investors decide to jump into the market right now, defensive stocks such as pharmaceuticals, utilities (water and electricity), and information technology may be some good options, he said.
Other sectors such as aviation, real estate, banking, oil and gas, logistics and transportation should be put on the watch list and investors should wait until the right time, he added.
Phan Dung Khanh, director of investment at Maybank Kim Eng Securities Co, said the market will continue to fall but there will be some technical recovery days.
It is hard for the market to reverse now as institutional investors still stall, foreign investors keep selling out and domestic capital is not strong enough to absorb the sold assets, he said. — VNS