Equities leveraging to increase

Property stocks are tipped to enjoy rich fortunes

State Bank statistics reveal that credit organisations and commercial banks’ total outstanding loans to equities investment reached VND14 trillion ($737 million) in the first five months of this year, up 13.6 per cent on-year.

Nguyen Thanh Ha, chief analyst with Saigon Securities Incorporated (SSI), said securities investment loans could make up 20 per cent of banks’ chartered capital. “We expect that banks’ money to equities will outperform loans for the real estate sector in late months of this year,” said Ha.

The VN-Index last week closed at 511.18 points on June 18 after the market fluctuated around the level for several weeks as investors feared the European debt crisis would weigh down market sentiment.

Tong Minh Tuan, deputy chief analyst with BIDV Securities (BSC), said uncertainty continued to haunt global markets. “Meanwhile, for Vietnam’s domestic market, banks’ lending rates are falling to around 11-13 per cent over the next two months, which is supportive of equities.”

A recent BSC report found that listed firms will release better-than-expected earnings in this year’s second quarter and investors will look to invest in stocks with good earning results. “I expect the market to soar to around 530-550 points within one month,” said Tuan.

Le Van Thanh Long, head of SME Securities’ business development, said that after correcting by around 10 per cent, for medium to long-term investors, market valuations were cheap. Long said in the short-term, the market would consolidate in the 480-550 point range and once global markets improved, the market would soar rapidly with blue-chips and strong fundamental penny stocks shining.

“Therefore, now [is a good opportunity] to accumulate Vietnamese stocks, especially those in the property, banking and material fields. But, the use of heavy financial leveraging is not recommended,” said Long.

Analysts with Saigon-Hanoi Fund Management Company (SHF) said as domestic economic fundamentals improved and the consumer price index stayed low, it would allow the government to focus on its 6.5 per cent economic growth target for 2010 and 7.5 per cent for 2011.

“If there is no bad news from global markets, we think that the 500-510 point range will be an opportunity for medium to long-term investors to cash in,” said SHF analysts.