Download: VAM_Monthly_Newsletter_Sep_2009
Vietnams economy continues its solid recovery with GDP growth rate of 4.56% through the first 9 months, making the government target of 5% for FY09 an easy task. Year to date industrial output picked up to 6.5%, the highest rate this year, providing further evidence that the economic recovery is spreading from construction to manufacturing sector. The retail sales growth improved modestly to 18.6% year to date in September from 18.4% in August. Concern about the return of inflation was slightly fostered when CPI rose 0.62% MoM in September, marking the highest level since March this year. However, the government kept confidence with the view that CPI would increase less than 1.0%/month on average in 4Q09 CPI and end the year at around 10%.
September saw exports and imports decrease 14.3% and 25.2% respectively year to date, causing the nine month trade deficit to reach US$6.5 billion, though it was still within the governments expected range of US$10 billion for the whole year. Policy makers are considering the second stimulus package to support local enterprises, especially those in manufacturing and export sectors, as they think these enterprises need a transitional phase after the first package finishes by year end.
The VN-Index experienced another bullish month, ending September at 580.9, up 6.24% MoM. However, the last few days saw an expected correction after the constant uptrend for most of the month.
For the quarter ending September 30th, the stock market advanced an impressive 30%, with some stocks even ending 100%-200% higher. We have observed that those stocks that exhibited such phenomenal performances are often those that either announced upward revisions to their FY09 profit targets or were rumored to have certain corporate actions pending. These one-off increases in some companies FY09 profit guidance, which were the main cause of such rapid surge in stock price performance of the underlying companies, were mostly due to financial investments or revaluation of assets (e.g. land).
For instance, one of the largest food manufacturing companies has recently doubled its profit target for the current year based only on land revaluation. This news caused the companys stock price to surge proportionately (i.e. double!) in the same period. Another company in the port business was rumored to have sold one of its ports and booked huge gains amounting to 3 times its previously announced FY09 profit target. That companys share price advanced 250 percent within three months and the price surge only stopped when the management stepped out to correct the rumor.
Source: Vietnam Asset Management ,08.10.2009
Filed under: Asia, News, Risk Management, Services, Vietnam, HaSTC Hanoi Stock Exchange, HOSE Ho Chi Ming Stock Exchange, Index, Market Analysis, VAM Vietnam Asset Management, Vietnam
