Market Timing: You need to be right 70%+ of the time to break even.

Market Timing:

You need to be right 70%+ of the time to break even.  Market timing skills are vastly overstated.  Various indicators may tell you that the market is over-valued but it does not tell you when the correction will occur.

You can always find under-valued stocks in an over-priced market.  PEs tend to revert to 16 but lower interest rates allow for much higher PEs.  There is a positive relationship between GDP growth and stock returns in any single year but it does not predict returns for the following year.

Increases in Interest rates leads to higher Cost of Equity and lower PEs.  Greater willingness to take risk leads to a higher Risk Premium for equity and higher PEs.  An increase in expected Earnings Growth leads to a higher Market PE.

• If markets are over-valued, you could switch from Growth to Value. 
• If a market increase based on real economic growth is expected, then you may switch into cyclicals. 
• If interest rates go up causing the market to drop, switch out of financials into consumer products. 
• N.B.  The market will bottom out and peak before the economy e.g. invest in cyclicals when the economy enters a recession then shift into industrials and energy as the economy improves. 
• Contrarians may invest in sectors that delivered the worst performance in previous periods.

Professional attempts at market timing have generally failed.

'Buy on the rumour. Sell on the News."

'Buy on the rumour.  Sell on the News."

This means that most of the benefit comes in the run-up with only a small advance after the announcement.

Markets are more efficeint about assessing good news; an investor needs to move quickly if he is to benefit.

Best if you can forecast the likely firms based on historical earnings and trading volume.

Low PE stocks may have high-risk earnings or low growth.

Low PE stocks may have

• high-risk earnings or
• low growth. 

You could modify earnings e.g. 

• P/Normalised Earnings 
• P/Adjusted Earnings, or 
• P/Cash Earnings [=P/Cash Earnings + Depreciation + Amortisation]  

Then check for Risk using

• Beta or
• Debt to Equity Ratio. 

 

Assess growth and eliminate

• declining Earnings or
• Earnings Growth lower than the sector.

 

****Investment Philosophy and Strategies Notes

Investment Philosophy and Strategies
http://www.docstoc.com/docs/7984050/Investment-Strategies

Portfolio Management Theory And Technical Analysis
Lecture Notes
http://samvak.tripod.com/portfolio.html

Large growth stocks have only seen 9.9% annualized rate of return as compared to 11.5% for the large value stocks.

Growth Stocks

06.12.2009 | Author: Ahmad Hassam | Posted in real estate

When you start looking for good stocks, you often come across these terms like large cap, mid cap, small cap, growth and value. Let’s discuss these terms for a moment. Capitalization or cap refers to the combined value of all the share of a company’s stocks. The division between large cap, mid cap and small cap are often blurry and not sharp.

However the following divisions are generally accepted: Large caps are companies with over $5 Billion in capitalization. Mid caps are companies with $1 to $5 Billion in capitalization and small caps are companies with $250 million to $1 Billion in capitalization. Anything below $250 million can be considered as micro cap. Now the most important term that you come across is growth stocks and value stocks. How do you determine this is a growth stock or a value stock? Perhaps the most important ratio is the Price to Earnings Ratio (P/E).

Perhaps the most important ratio is the Price to Earnings Ratio (P/E). Now the most important term that you come across is growth stocks and value stocks. How do you determine this is a growth stock or a value stock? Suppose, company ABC stock is presently selling for $50. Now suppose that last year company ABC earned $5 for every share of the stock outstanding. This means stock ABC P/E ratio is 50/5=10. So the higher the P/E ratio, the more investors are willing to pay for the stock. What is the P/E ratio? The P/E ratio divides the price of the stock by the earnings per share.

Let’s make this clear with an example. Do you know how to read the balance sheet of a company? One of the most important things in doing research on a stock is the balance sheet of the company. Suppose, company ABC stock is presently selling for $50. Now suppose that last year company ABC earned $5 for every share of the stock outstanding. This means stock ABC P/E ratio is 50/5=10. So the higher the P/E ratio, the more investors are willing to pay for the stock. So what is the P/E ratio? The P/E ratio divides the price of the stock by the earnings per share. Over the years, studies have shown that the P/E ratio is somehow related with the growth of a company. Now the higher the P/E ratio, the more growth the company is supposed to have. So it can be either the company is growing real fast of the investor have high hopes of its growth. Now these hopes can be realistic or foolish, you never know!

Growth companies are usually adolescent companies usually in sectors like computers, technology, telecom while value companies are mature companies usually in sectors like insurance, banking, manufacturing. Now, if you follow financial news than you must know that the large growth companies always grab the headlines. But do the growth stocks really make best investment? The lower the P/E ratio, the more value the company has. Low P/E ratio companies are not considered to be the movers and shakers in the market. Is there any statistical study that can guide us as to the performance of these different categories of stocks? Eugene Fama did seminal research on stocks and stock market s in’70s. Most of his results were startling and broke many myths. According to Fama and French, two famous researchers who did ground breaking research on stocks, over the last 77 years, large growth stocks have only seen 9.9% annualized rate of return as compared to 11.5% for the large value stocks.

So most of these growth stocks become highly popular in a small period of time! Everyone rushes to buy these growth stocks thinking that they are great investments. The most probable cause seems to be their immense popularity. Since most of the headlines are captures by high growth companies, investors seem to think that they are the best investments. Now intuitively you might have thought that growth stocks are better. What can be the reason for their lower performance over the years?

Let’s go back to the IPO of Google. Think about Google, how its stock price shot up within a matter of weeks after it hit the market. Weeks after that it began to cool off. In 2007, Google stock was selling something around $500. So large growth stocks tend to get overpriced before you are able to buy them!

Mr. Ahmad Hassam has done Masters from Harvard University.
http://www.colorofcredit.com/growth-stocks/

Many Mutual Funds Are Up 50% in '09 — But Beware

Many Mutual Funds Are Up 50% in '09 — But Beware
By Janet Morrissey Sunday, Dec. 06, 2009


Read more: http://www.time.com/time/business/article/0,8599,1945880,00.html#ixzz0YydcoP0W


It's been a great year for many mutual fund investors. Standard & Poor's Equity Research reports that 165 equity mutual funds are up at least 47% through October 31st, or at least double the return of the S&P 500.

While investors in those funds should feel euphoric, S&P is quick to issue a warning to investors who might fall victim to those seductive returns. The S&P report, issued Friday, indicates that many of the best-performing funds relied on short-term strategies and paid little attention to the underlying fundamentals of the stocks in their portfolios, which could lead to a performance problem in 2010. "Using only a backward-looking approach to selecting funds [i.e., past performance] has significant flaws because it ignores the fundamentals of the stocks owned by the fund along with relevant risk and cost factors of the fund," the report said.

Of the 165 domestic equity funds that at least doubled the market's return, only 12% are ranked as S&P five-star funds. In fact, 19% are now ranked with a one- or two-star rating, effectively placing them in the bottom half of funds on overall attractiveness. "These funds have relatively weak fundamentals that contribute negatively to the ranking," S&P's analyst note in their report. The reasons cited for such low star rankings: Many own overvalued or risky stocks, have managers with short tenures, have high costs or offer poor long-term performance.

The S&P research team cited Hotchkis & Wiley Mid-Cap Value Fund, Legg Mason Capital Management Opportunities Trust and Fidelity Select Automotive Portfolio as examples of funds that had eye-popping 2009 returns, but are currently ranked as two-star funds by the S&P.

The Hotchkis & Wiley Mid-Cap Value Fund is up 52% so far this year, making it the fifth-best performing mid-cap value fund this year, according to Morningstar. However, S&P believes the fund's "volatile longer-term performance should give investors cause for concern." It noted that the fund significantly lagged its peer average in 2007 and 2008, pushing it into the bottom quartile on a three- and five-year total return basis. Also, S&P analysts contend the fund's securities are currently overvalued and pose risk based on their growth and consistency when it comes to historical earnings and dividends. It also cited the fund's cost factors as contributing to the fund's weaker ranking.

However, Stan Majcher, principal and portfolio manager of the Hotchkis & Wiley Mid-Cap Value Fund, disagrees. Majcher noted that his fund has a strong long-term performance record, as Morningstar currently ranks it the third best performing mid-cap fund when it comes to annualized returns over the past 10 years, with an annualized return of 10.85%. He acknowledges the fund underperformed in 2007 and 2008, but doesn't think these periods should be considered in isolation.

Majcher says his fund's strategy is to seek out stocks that are wrongly considered risky or overvalued. "We screen for and invest in securities that are misunderstood," he says. "We'll tend to have stocks that look like they have poor characteristics, but when you dig a lot deeper, they don't." He said many of these companies have "temporary issues" that will go away and lead to higher stock performance. His portfolio trades at less than 10 times earnings, which is not overvalued, Majcher contends. "The portolio trades at less than 10 times earnings and the market trades significantly higher than that - usually 14 or 15 times."

He also noted that he's been managing the portfolio since 1999, which should wipe out concerns about "short tenures."

"We've been around for 10 years and this isn't the first time we've screened poorly," Majcher says, "but we have actually have good performance over the period."

On the postive side, S&P named the Pin Oak Aggressive Stock fund as an example of a fund that performed strongly in 2009 and remains a good bet for 2010. The fund is up 71% so far in 2009 and "scored positively on S&P Fair Value and for its low-cost factors-components in the S&P fund ranking." The fund's portfolio manager, Mark Oelschlager, says his fund always seeks out stocks based on valuation and long-term investment. His fund started moving into cyclical stocks and increasing risk late last year at a time when "fear was rampant" in the market because "it was mispriced," he says. "We pay a lot of attention to valuation," adds Oeslschlager. "This paid off this year and we think it will pay off next year as well."

Oelschlager also noted that his firm keeps a low expense ratio, keeps trading costs down and manages its portfolio in a tax-efficient manner.

Such factors are the ones to consider, says S&P analyst Todd Rosenbluth, along with fundamentals, risk, performance track record and cost factors. "Before making a selection, make sure to look at not just the gains the fund may have achieved this year, but also aim to understand the fundamentals of its performance, risk and cost factors," he said, in a statement. "This year's top fund could repeat their success in 2010 or be next year's bottom funds."



Read more: http://www.time.com/time/business/article/0,8599,1945880,00.html#ixzz0YydSEPCl

AIG Reduces Fed Borrowings by $25 Billion

AIG Reduces Fed Borrowings by $25 Billion
By AP / STEPHEN BERNARD Tuesday, Dec. 01, 2009


(NEW YORK) — American International Group Inc. on Tuesday slashed the amount of money it owes the government by $25 billion as it moved two subsidiaries into special holding units ahead of their planned spinoff or sale.

AIG moved American International Assurance Co. and American Life Insurance Co. into special purpose vehicles, which are used ahead of a move to separate a unit from a parent company. The government is receiving preferred equity stakes in the two life insurance companies worth $25 billion in exchange for a reduction in the amount of money AIG owes the government.

AIG will continue to hold the common stakes in AIA and Alico until it determines whether to complete initial public offerings for the companies or sell them privately. No timetable yet has been announced for when an IPO or sale will be completed.

Shares of the conglomerate based in New York rose $1.49, or 5.2 percent, to $29.89 in premarket trading.

AIG was bailed out by the government last fall at the peak of the credit crisis. As losses continued to pile up, the government eventually extended AIG an aid package worth more than $180 billion. The government also received a nearly 80 percent stake in AIG in return for the support.

The insurance giant has been selling assets and spinning off divisions in an effort to help repay the government debt.

As of Sept. 30, AIG had tapped $122.31 billion of the aid package and owed the government $85.66 billion in loans. Tuesday's separation of AIA and Alico would reduce the outstanding aid package to $97.31 billion and the amount owed in loans to $60.66 billion. "AIG continues to make good on its commitment to pay the American people back," AIG CEO Robert Benmosche said in a statement.

The government received a preferred stake in AIA, an Asian life insurer with more than 20 million customers, worth $16 billion. The preferred stake in Alico, an international life insurance firm that operates in more than 50 countries around the world offering life and health insurance, is worth $9 billion.

AIG said it would take a $5.7 billion charge during the fourth quarter tied to accelerating the moves of AIA and Alico into separate, stand-alone units.

Benmosche reiterated AIG continues to expect volatility in quarterly results as the insurer continues to restructure its operations to repay the government.

The plan to separate AIA and Alico and give the government $25 billion in preferred shares of the two companies was first announced in late June. AIG had been discussing sales of the units as early as March.



Read more: http://www.time.com/time/business/article/0,8599,1943739,00.html#ixzz0Yy1gaCuf

Listing abroad not easy for local firms, insiders say (Vietnam)

Listing abroad not easy for local firms, insiders say

Last updated: Saturday, October 10, 2009 |
VnnNews - Listing procedures have proved difficult for Vietnamese firms aiming to sell shares on foreign stock markets.

The Hanoi-based infrastructure developer Cavico Corp. completed a “hard journey” in meeting all the requirements to become the first Vietnamese firm listed on the US national securities exchange NASDAQ last month, Chief Executive Officer Bui Quang Ha said.

“The listing procedure was a rigorous process, specifically the due diligence conducted by NASDAQ,” Ha said in a statement following the listing on September 18.

He said the company had consulted with the New York-based full-service investment bank Rodman & Renshaw LLC during the application while leading US law firm Sichenzia Ross Friedman Ference LLP represented Cavico during the process.

Cavico shares had been traded on the US OTC Bulletin Board under the ticker symbol CVIC before it was listed on NASDAQ, the largest US equities exchange.

“Following a comprehensive evaluation of all US exchanges, we determined that the NASDAQ Capital Market was the best fit for Cavico Corp.,” Ha said in the statement.

Trading of Cavico’s common stock commenced September 18 under the ticker symbol CAVO.

Founded in 2000, Hanoi-based Cavico Corp. focuses on large infrastructure projects, including hydropower facilities, bridges, tunnels, roads, and mines.

The PetroVietnam Finance Corp. (PVFC), a unit of Vietnam Oil & Gas Group, is now finalizing the documents needed to list on the Singapore Stock Exchange (SGX).

The company hopes to list during the second quarter of next year as Vietnam’s first credit organization listed abroad, Tong Quoc Truong, general director of PVFC, told Thanh Nien.

PetroVietnam, as the parent company is known, owns 78 percent of PetroVietnam Finance, which is the second-largest listed company on the Ho Chi Minh Stock Exchange.

Truong said the listing aimed to make the company brand known internationally, to mobilize funds from foreign investors and to expand its business across Asia, starting with Singapore.

Though advised by Morgan Stanley, a market leader in securities, Truong said it had been hard for the firm to fulfill all the listing procedures.

“There’re so many procedures that we’re still not sure how much farther we have to go from now until the listing.”

According to a stock expert who asked to remain anonymous, listing procedures are not the biggest problem as there are different options in every country.

Foreign exchange management regulations allow foreign investors to open an account in Vietnam and buy shares here, but not vice versa.

He said the system should be more equal for domestic and foreign investors.

The State Securities Commission in August began collecting its members’ opinions for a draft decree that would instruct domestic firms on how to list abroad.

Since 2007 many locally-listed firms have set overseas listing as a major goal, including Vietnam largest dairy firm Vinamilk (VNM) and PetroVietnam Drilling and Well Services Joint Stock Co. (PVD).

VietNamNet/TN

http://www.vnnnews.net/listing-abroad-not-easy-for-local-firms-insiders-say

With high grade apartments unsalable investors’ money remains buried (Vietnam)

With high grade apartments unsalable investors’ money remains buried

Last updated: Tuesday, October 6, 2009 |
VnnNews – Though prices of luxury apartments have been decreasing sharply, the demand for expensive products remains low.

Speculators complain capital has been ‘buried’ in apartments as they still have not been able to sell them for the last several months.

Phan Ha, an investor in district 1 of HCM City, said that he has two unsold high grade apartments worth nearly 6 billion dong ($20,761) at Blooming Park building. When it was launched, Ha had purchased the two apartments at 30 million dong per square metre as an investment.

However, to date, Ha still cannot sell the apartments, and the apartments’ prices have not seen any increases.

However, the address and location would appear to still be fashionable. Blooming Park is located next to Thu Thiem new urban area and the Metro Supermarket. Besides, the land area is not far from the East-West Boulevard, Thu Thiem tunnel, the belt road of Phu My Bridge and Tan Cang Industrial Zone.

Ha still cannot find buyers even when he is offering to sell the apartments at the original prices. However the prices at 2.8 billion dong ($164,700) and 3.1 billion dong ($182,352), still remain unattractive to buyers.

Other projects have also left products unsalable. Director of Tran Nao Branch of Vinaland Nguyen Xuan Loc said that high grade apartments are not proving popular these days. Few appear interested in the apartments at The Vista, Riverside or Sunrise projects.

Explaining the lack of lack of attraction, Ngo Duong Hoang Thao, Chairman of Dai Dong Duong Consultancy Company, said the supply of high grade apartments has exceeded demand.

Nguyen Thi Thanh Huong, Director of Tin Nghia real estate trading floor, said there has been little interest in high grade apartments on her trading floor, however, land plots are selling very well.

According to Thao, the main buyers of high grade apartments are secondary investors, who hope that they can sell the apartments later for profit.

However, secondary investors are quiet after suffering losses on other deals and the economic downturn has made people poorer, thus unable to afford expensive houses.

Meanwhile, low cost apartments are selling well. Le Thanh Company has sold its 134 apartments in Binh Tan district easily. The company’s Director Le Huu Nghia said that the apartments have been selling well due to their reasonable price of 6.5 million dong ($382) per square metre which is much lower than $1,300-2,000 per square metre of high grade apartments.

Phuoc Ha

http://www.vnnnews.net/with-high-grade-apartments-unsalable-investors-money-remains-buried

Scarce dollar strains Vietnam currency market

Scarce dollar strains Vietnam currency market

 

 

Last updated: Sunday, October 4, 2009 |
VnnNews - Vietnam is facing a dollar shortage as a result of lackluster capital inflows this year, experts say.

 

 

VnnNews - Vietnam is facing a dollar shortage as a result of lackluster capital inflows this year, experts say, calling for adjustments to the exchange rate to ease the strain on the local currency market.

The foreign currency supply this year, for the first time, has fallen short of demand and the central bank had to sell part of its dollar reserves to ease the shortage, Le Duc Thuy, a former central bank governor, said in an interview published by the weekly Saigon Economic Times in mid September.

 

Although imports fell, the decline in exports and capital inflows was even greater, said Thuy, who is now chairman of the National Finance Supervision Committee.

 

A senior official at ANZ Vietnam, who is not authorized to speak on record, told Thanh Nien Weekly that foreign investments and overseas remittances have helped keep Vietnam’s balance of payment in check. But this year “we see a reduction in all of those sources due to the global crisis and the collapse of the stock market,” he said.

• Foreign direct investment inflows into Vietnam dropped 11 percent to US$7.2 billion in the first nine months of this year from a year ago.
• Meanwhile, overseas remittances are forecast to fall to $6.8 billion this year, compared to $8 billion in 2008.

 

“From a microeconomic standpoint, businesses – especially exporters – are reluctant to sell dollars to banks in hope that their dollars will be worth more,” the ANZ official said.

 

“These factors combined lead to the scarcity of dollars for payment in the market… The increase of the dong/dollar rate reflects this scarcity.”

 

The dong has weakened about 2 percent this year against the dollar and touched a record low of VND17,862 on July 23, according to Bloomberg data.

 

“The currency market is now under strain,” Thuy said. “Businesses have difficulties in currency trading. Those who have foreign money don’t want to sell it while those in need of foreign exchange can’t buy it.”

 

Many businesses that needed dollars chose to take dong loans to benefit from a government rate subsidy package. They then bought dollars, Thuy said.

 

If businesses had just borrowed in dollars, they would not have put any pressure on the currency market, he said.

 

An increase in dollar borrowings could partially lessen the pressure on the exchange rate because businesses would have more dollars to settle payments, the official at ANZ said.

 

“It is important to note that while dollars for payment are quite scarce, dollars for lending, on the other hand, are rather sufficient. This is because banks are only allowed to lend the dollars from their customers’ [deposit] accounts, but not sell them.”

 

Exchange rate

 

Nguyen Khac Quoc Bao, a professor at the Ho Chi Minh City University of Economics, said in a telephone interview on Tuesday that the current pressure on the dong/dollar rate can be explained mainly by psychological factors.

 

Many people fear inflation will not ease and the dollar will gain value against the dong, and this prompts them to move their assets out of the dong and place it on the dollar, he said.

 

However, Bao said he expects the pressure on the currency market may ease soon as the central bank is likely to step in and adjust the exchange rate slightly.

 

The first good sign on the market may have emerged already. The central bank said in a weekly report on its website last Friday that local exporters have started increasing sales of dollars to commercial banks, helping ease the dollar shortage.

 

A banker told Reuters Monday that the central bank’s pledge to keep the dong stable has calmed businesses, especially exporters, and encouraged them to sell their dollar earnings.

 

The central bank had sufficient dollar reserves to intervene in the market when necessary, but the question is whether the bank needed to do so or not, Thuy said in the interview with the Saigon Economic Times.

 

“I think an adjustment in the official exchange rate is enough to keep supply and demand in balance, without the need for government intervention.” (Vietnam recently devalued its Dong)

 

An experience gained from the past is that dollar prices in the unofficial market should be kept within VND100 above the rates in banks, Thuy noted. “There will be problems if the gap is more than VND100.”

 

With a gap of VND500, for instance, a firm selling $1 million to a bank would earn VND500 million ($28,026) less than what they could from the unofficial market, he said, pointing out that this difference is enough for a medium-sized firm to pay salaries for several months.

 

VietNamNet/Thanh Nien

http://www.vnnnews.net/scarce-dollar-strains-vietnam-currency-market

Finance Ministry researcher warns that exports don’t always pay (Vietnam)

Finance Ministry researcher warns that exports don’t always pay

Last updated: Thursday, October 1, 2009 |
VnnNews – When Vietnam increases its exports, it must import more materials to make exports, an expert warns.

In the first nine months of 2009, garment exports brought Vietnam $6.7 billion in revenue, according to the General Statistics Office (GSO). Meanwhile, Vietnam had to import $4 billion worth of materials to create those exports.

Dr. Vu Dinh Anh, a deputy director of the Market and Price Research Institute, a Finance Ministry think tank, said that in the garment industry, the cost of materials is 80 percent of the total production cost. Therefore, Anh said, the more Vietnam exports garments, the more it has to pay to import materials.

Anh also reached a surprising conclusion: although exports create several tens of millions of jobs and bring some $60 billion every year to the national economy, if the cost of imports needed to enable the production of export products is considered, exports actually reduce GDP by two percent.

Among the import items, machinery and material inputs for domestic production account for the biggest proportions. Only ten percent of Vietnam’s imports are consumer goods. Therefore, experts say that even if Vietnam raises the tariff on cars and imposes a luxury tax on mobile phones, this still won’t close the trade gap.

Meanwhile, there are a lot of problems relating to exports. Though export volume has increased sharply (up 11 percent year over year), export revenues did not increase proportionately – in fact they fell by 10 percent!

Although crude oil exports increased eight percent year over year in the first eight months of 2009, revenues from oil exports fell by 41 percent. As for rice and pepper exports, though the export volume was up by 50 percent, total earnings fell by slightly.

Dr Nguyen Thi Nhieu of the Trade Research Institute warns that no breakthrough is likely from now to the end of the year. She said that the demand in the world market has just begun recovering from a low base and a lot of economies have applied measures to protect their local production. The competition among exporters has become stiffer in the world market, and Vietnam’s competitiveness remains weak.

Dr. Anh of the Market and Price Institute believes that it is not imperative to push up exports to fix the current problems in the trade balance and to avoid bad balance of payments impacts. Instead Vietnam should restructure the import-export menu and develop its internal market.

The General Statistics Office (GSO) has urged encouraging domestic consumption and relying on the internal market as the ‘fulcrum’ for development. GSO argues that Vietnam should make strategic choices among the materials it seeks to export and to supply to the domestic market.

Even during the Asian financial crisis of 1997-99, Vietnam was able to maintain positive export growth. However, this year the Ministry of Industry and Trade projects that Vietnam will export only $59 billion worth of products, a six percent decrease from 2008 and considerably short of the target. If this scenario holds, 2009 will be the first year in two decades of doi moi policy that export values will decrease.

VietNamNet/VNE

http://www.vnnnews.net/finance-ministry-researcher-warns-that-exports-dont-always-pay

Vietnam stock market less attractive than neighbours’

Vietnam stock market less attractive than neighbours’

Last updated: Tuesday, November 17, 2009 |
VnnNews – HSBC still says Vietnam’s stock market is less attractive than other regional markets.


HSBC highlighted that after reaching a peak of 600 points in late October 2009, the VN Index had decreased by eight percent by November 9.

The VN Index has lost more points than other Asian markets from the beginning of the fourth quarter of the year to November 9. According to HSBC, since then Vietnam has remained the second worst market in Asia in the fourth quarter.

October 2009 witnessed the prosperity of Vietnam’s stock market with the daily trading volume of both the Hanoi and HCM City increasing by 63 percent to 315 million dollar from 193 million dollar in August.

However, HSBC pointed out that within the first five days of November, foreign investors had a net sale of 15 million dollar, a level which much higher than the one million dollar level seen in October.

The sale of foreign investors has led to the decrease in foreign ownership ratio in Vietnam’s stocks to 16 percent from 21 percent in July.

According to HSBC, foreign investors are now making up five percent of daily total trading volume on the market. After the VN Index has been decreasing, losing achievements gained in the fourth quarter, the market now has Asia Commercial Bank’s share (ACB) as the only share item which has the foreign ownership ratio at the ceiling level.

The report made conclusion that in the current context of Vietnam’s weak macroeconomic conditions, foreign investors will not return to the market soon.

The report affirmed that Vietnam’s stocks are now more expensive than stocks in other regional markets. The same conclusion has been repeated continuously in recent reports about Vietnam’s market.

According to HSBC, the current P/E (price to earning ratio) on HCM City bourse is 23.8. If suggesting that the EPS (earnings per share) of the next 12 months is 20 percent, then the P/E of the next 12 months would be 19.1, while the P/E of 2010 would be 15.

HSBC believes that these P/Es are well higher than other regional markets, such as Thailand (P/E of the next 12 months would be 12), China (14.7), Indonesia (14.6) and the Philippines (15).

The banking group said that it recognizes less factors which may foster growth in Vietnam than in other markets. The experts of the banking group have doubts about the recovery of the real estate market in Vietnam.

VietNamNet/TBKTVN

http://www.vnnnews.net/vietnam-stock-market-less-attractive-than-neighbours

Hanoi’s real estate prices rise by 20%

Ha Noi’s real estate prices rise by 20%

Last updated: Sunday, November 15, 2009 |


VnnNews - Real estate in several areas of the capital city has seen 20-30 per cent increases in the last month.
Those affected include newly incorporated areas in expanded Ha Noi such as Ha Dong, Tu Liem and Thanh Tri.

Price of real estate in the areas was equal to or even higher than that in the inner city’s districts, said Dao Minh Thuy from the Ha Dong’s Long Thuy Property Brokerage Company.

Thuy said that a square metre of land along major streets in Ha Dong currently reached VND140-150 million (US$7,800-8,300) and roughly VND180 million ($10,000) in Tu Liem’s Le Duc Tho Street. A square metre of land in Bach Mai Street is currently about VND130-135 million.

Land located off small alleys had also sharply increased by roughly VND5 million per square metre over last month, said a property broker in the My Dinh area said.

A property investor, who bought a plot in Me Linh District at the price of VND9.2 million per square metre at a property trading floor two weeks ago, said that the floor currently appraised the land at the price of VND11 million per square metre.

Earlier this month, thousands of people crowded the sales office of the Nam Cuong Real Estate Co, expecting to be able to buy apartments at their original prices.

A deputy director of a construction company, who declined to be named, attributed the price rises in the past month to speculation.

Currently, people can only purchase apartments directly from investors if they have close relations.

The scramble for purchases is based on speculators expecting prices of the apartments to increase dramatically when they are later sold on the secondary market. The prices set for the Duong Noi flats, which will range in size from 50-200sq.m, are described as very ‘soft’, from $880 to $1,200 per square metre.

The deputy Minister of Construction, Nguyen Tran Nam, said that people often bought property based on rumours, warning investors to be careful with such information.

Nam said that some investors were overly influenced by rumours leading them to quickly invest but after little research. Whenever they heard that land prices in certain areas were “hot” they would immediately rush to buy.

Le Duc Hien, deputy head of sales at Viglacera Real Estate, said that the real estate market needed transparency.

Hien said that with transparency, clients would be able to purchase apartments at their original prices, while investors would gain prestige in the eyes of people. Real estate developers who could gain customers’ confidence would be the long-term winners in the market.

VietNamNet/VNS

http://www.vnnnews.net/ha-nois-real-estate-prices-rise-by-20

Smart money ready for future profits (Vietnam)

Smart money ready for future profits


Last updated: Saturday, October 31, 2009 |
VinaCapital is holding its 2009 Investor Conference just as the Vietnamese economy is starting to heat up again. However, foreign investors have not yet returned to Vietnam after the 2008 crisis.



VinaCapital is holding its 2009 Investor Conference just as the Vietnamese economy is starting to heat up again. However, foreign investors have not yet returned to Vietnam after the 2008 crisis.



VinaCapital Group’s chairman Horst F. Geicke discusses with VIR the opportunities foreign investors should be looking for in 2010 and beyond.

Foreign direct investment registration and foreign portfolio inflows have dropped considerably in 2009. Can Vietnam regain the investment momentum lost after 2008?

Vietnam’s economic performance in second and third quarters of 2009 has been remarkable, including the recovery of the capital markets. But it’s true that foreign investors have been largely absent from the market, buying only about $36 million in shares. This is not the case for countries like Indonesia and Thailand, so we could say that Vietnam has temporarily lost its shimmer in the eyes of foreign investors. However, I believe this downturn will not last.

After the domestic crisis in early 2008 sunk the VNIndex to under 400 points, the market briefly recovered to 600 points in mid-2008 before the global crisis took hold and the index fell to a low of 235 in February 2009. With the country’s recent economic rebound, the market is once again at 600 points.

This type of turbulence always challenges foreign investors and has people rethinking their strategies. For VinaCapital, our view on the market here has not changed even during the recent turbulent times.

How should Vietnam approach foreign investors now? Is enough being done to attract investors that seem to have begun looking elsewhere?

One very positive sign is that during this volatile period, Vietnam’s government has managed economic policy with a notable degree of flexibility and competence. It is not often that a country can emerge from two full-blown economic crises in the space of 12 months to record 5 per cent gross domestic product growth and world-beating stock market gains. Vietnam’s economic resilience in 2009 has been nothing short of remarkable.

This will boost the confidence of foreign investors. That Vietnam experienced great volatility during the 2008 financial crisis was essentially unavoidable. How the government managed to stabilise the economy is what will garner attention, and this is something that should be explained and promoted to foreign investors as much as possible.

Among the positive press so far: HSBC in September predicted gross domestic product (GDP) growth in 2010 would be 6.8 per cent, and UK Trade & Investment for the second year running has Vietnam at the top of its non-BRIC ‘priority markets’ for global investors over the next five years. So people are taking notice.

VinaCapital will continue to work hard at promoting Vietnam. We have played an active role for six years in communicating the ‘Vietnam story’ to investors around the world. At venues like the World Economic Forum, Vietnam’s presence has been strengthened in part by VinaCapital’s efforts as a ‘commercial ambassador,’ bringing foreign investors and the country’s top corporate leaders together.

What are some of the main messages VinaCapital is delivering at its investor conference? What can you share about Vietnam’s current investment environment?

Above all, we believe that Vietnam is one of the top emerging markets in the world today. However, even as the dark clouds clear from the economy, events of the past two years have taught us all valuable lessons in preparing for the next rainy day.

Vietnam has great prospects, but at the corporate level there will be winners and losers. Proper asset allocation and risk management will be crucial to avoid unnecessary losses if the market experiences another unexpected downturn. We should manage our expectations and not encourage a return to the over-exuberance of 2006-07.

Identifying the winning sectors is not so difficult. But finding the winning companies and opportunities within these sectors is more challenging. The driving force in the domestic economy is urbanisation and the growing middle-class consumer base with its increasing demand for improved services and more modern living and shopping spaces.

Residential housing and retail facilities, urban infrastructure, consumer goods, healthcare and financial services are all areas that will develop rapidly. These sectors are relatively easy to identify, as they are common to many emerging markets.

VietNamNet/VIR

http://www.vnnnews.net/smart-money-ready-for-future-profits

Major private gold shop shut down, owner reportedly flees (Vietnam)

Major private gold shop shut down, owner reportedly flees

Last updated: Wednesday, November 18, 2009 |
Tuan Tai gold shop, one of HCMC’s biggest private bullion traders, on Monday suspended its operations as police raided the store in the center in District 5.

The electronic board of Tuan Tai gold shop still displays gold prices on November 16, but its operations stop as the shop owner is suspected of having run away with debt.

People who were sitting in front of the shop at 37-39 Chau Van Liem Street on Monday said the shop owner, whom gold traders often refer to as Ms Kim Thanh, had run away due to big debt.
As witnessed by the Daily on Monday afternoon, jewelry and other gold products were no longer displayed at the shop.

Some anxious lenders of the shop owner who were either inside or outside the shop said the shop owner had raised funds from them at much higher interest rates than what banks were offering. They said the shop owner had disappeared since November 15.

The general director of a gold trading company said Tuan Tai was a fairly big gold trader in the city, so the closing of the shop would affect those people having a trade relationship with it.

Trading accounts held by Tuan Tai at some gold exchanges have been frozen due to great losses. On Tuan Tai’s website, it said it was a trading member of the gold exchanges of banks like Asia Commercial Bank (ACB), Vietnam Asia Commercial Bank, Eximbank, and Sacombank.

Police of District 5 and those of the district’s Ward 14 where the gold shop is registered declined to comment when reached by the Daily on Monday afternoon. Witnesses around the shop said police had come in the morning and took away things from the shop.

Tuan Tai Service Trading Production Limited Company gained a business license from the HCMC Department of Planning and Investment on October 18, 2005 with chartered capital of VND100 billion. Its operations include trading and importing gold and jewelry, and trading gold on foreign exchanges.

Tuan Tai is one of the few gold trading companies licensed by the central bank to trade gold on foreign exchanges. The company also provides big volumes of SJC gold bars to customers including commercial banks and local gold trading companies.

VietNamNet/SGT

http://www.vnnnews.net/major-private-gold-shop-shut-down-owner-reportedly-flees