The report, titled "Economic Insight: South East Asia" says the current rises in stock prices may not be sustained.— File Photo

HCM CITY (Biz Hub)— International investors looking for yield have been pumping money into ASEAN stock markets, and this has prompted Vietnamese stocks rising over 10 per cent in the twelve months leading to March 2013.

This conclusion was reported by the Institute of Chartered Accountants in England and Wales (ICAEW).

The report, titled "Economic Insight: South East Asia" says the current rises in stock prices may not be sustained.

ICAEW's economic advisor Charles Davis said: "Stagnation in industrialised nations means investors are turning to emerging economies in search of higher yield. ASEAN stock markets have ridden this wave of capital, sending stock prices skywards. But the growth rates we are seeing in some countries – 20 per cent in Indonesia and 34 per cent in the Philippines – are not sustainable, and could hint of an emerging bubble."

Strong market investment is also being matched by firms and households taking on higher levels of credit. The ratio of debt-to-income had been declining until 2010, but a positive outlook has led to the private sector increasing its debt exposure, which is now in the region of 120-130 per cent for Singapore, Thailand and Malaysia.

Mark Billington, Regional Director, ICAEW South East Asia, said: "Debt levels in the region remain manageable for as long as the projected positive growth story remains. For the moment, debt levels are around half of what they were at the peak of the Asian crisis. This is fine for now but would be a cause of concern if credit growth continues to outpace nominal GDP growth at the same rates we see today."

"Growth outlook for both Viet Nam and ASEAN as a whole remains healthy. However careful judgement will be needed to ensure that credit growth and capital inflows are used to lay the foundation for future prosperity and not fuel a bubble," he said.

The report also said low returns on government debt are pushing capital to emerging market assets. Combined with growth in credit, inflation and bubbles may form though currently, regional markets look healthy as governments keep a close watch on housing and equity markets. — VNS