International interest in Vietnamese stock market

An executive of an investment fund affirmed, on Jan. 22, that foreign investors would pay more attention to the Vietnamese securities market as Viet Nam now gained World Trade Organisation (WTO) membership.

"Viet Nam's entry into the WTO will not have direct impact on the Vietnamese stock exchange, but foreign investors will pay more attention to the market," Dominic Scriven, Director of Dragon Capital, said in an interview with the VNA. "During the process of international integration, the stock exchange will be adjusted by practices on the world market."
Scriven said that the year 2006 witnessed many big leaps in the Vietnamese stock market, with VN-Index soaring and the growing number of listed companies, from 38 to 156, on both Ha Noi and Ho Chi Minh City Securities Trading Centres.

He cited the enactment of the Law on Securities as last year's another important development. "The law has created a legal foundation for operation of the securities market. In the mid-and long-term, its introduction is particularly significant to the stock market of Viet Nam," he said.
Commenting upon experts' opinions that the Vietnamese stock market is growing too hot, with the price-to-earnings (P/E) ratio of various kinds of shares being high in comparison with the level in the world market, Scriven said for a new market like the Vietnamese stock exchange, it was difficult to say what P/E ratio is appropriate. He added that for the time being, P/E ratio can be up or down, but it will then reach a balanced point.

When asked why many foreign investors, both individuals and organisations, still kept buying shares although the prices of various kinds of shares were too high, he said that if a majority of investors share a similar view, their view will become a common view of the market.

"Investors themselves decide to buy or sell shares and nobody interferes with their decisions. We only recommend that they carefully consider before making investment decision," the director said.

Source: VNA