While experts and mass media are busy arguing how trustworthy Merrill Lynch’s report is, speculators have time and opportunities to buy shares at low prices as investors try to sell shares for fear of the forecast gloomy prospects for the stock market.
Thoi bao kinh te Vietnam has posted the analysis of Nguyen Duc Thanh, an expert, who has tried to explain why Merrill Lynch’s conclusions about Vietnam were so contradictory.
“The fact that Merrill Lynch withdraws from Vietnam, in case the recommendation of the research team is accepted, does not say much about Vietnam’s market. It says more about Merrill Lynch itself,” the author writes.
If considering the investment portfolio of Merrill Lynch in Asia, one can note that the group has more investments in well-developed markets, including the four Asian tigers (ROK, Taiwan, Hong Kong and Singapore) and Australia, which account for 70% of total investment. Meanwhile, smaller and emerging markets in Southeast Asia (Thailand, Indonesia, the Philippines and Vietnam) are clearly not its priority destinations – 8.5% of total investment only.
The remaining investment proportion has been allocated to China (14%), and South Asia (India 2.5% and Pakistan 2.5%), big markets with big opportunities. Therefore, it is quite understandable why the research team has suggested pushing up investment in India and China.
Mr Thanh has pointed out that the changes in the conclusions of Merrill Lynch about Vietnam’s stock market coincide with changes in the group’s staffs.
The first report about Vietnam’s market was released on February 2, 2006. It was written by Spencer White, Stephane Corry and Willie Chan (all were staffs of Merrill Lynch Hong Kong). As the names of the authors were not listed in alphabetical order, it could be surmised that the head of the research team was Mr Spencer. The report, forecasting a bright future, urged Merrill Lynch to enter Vietnam as soon as possible.
The second report, dated June 29, 2006, was made by the same research team. Though the market went down sharply at this time, the research team was still optimistic about Vietnam.
The third report was launched on October 5, 2006, with the note, ‘corrected’. On the list of the report’s authors, the name ‘Mark Mathews’ appeared just after Spencer, and it is interesting to note that Mark is a staff of Merrill Lynch Singapore, not Hong Kong as the other three members. It was a time when the market began recovering (and increased considerably in the next months as people witnessed). However, the report consisted of some pessimistic conclusions about Vietnam.
More pessimistic conclusions were seen in the latest report, dated July 5, 2007. In this report, the name ‘Spencer’ disappeared, and ‘Mark’ appeared as the head of the research team. The report, as said before, recommends that Merrill Lynch direct its sources of strength into China.
The viewpoint of Merrill Lynch about Vietnam seems to change in accordance with the changes of the viewpoints of the consultants to Merrill Lynch.
As such, Vietnam’s stock market and Vietnamese investors seem to be victims of some kind of ideological conflict, taking place several thousands of kilometers from Vietnam in some small office.
The report has shocked many investors and raised arguments among analysts and experts, but has brought big opportunities to many other investors and speculators.
60-year-old investor Tran Van Minh on SSI trading floor said, “Why should I follow other investors to sell shares at low prices and then have to buy shares later at high prices?” he said, adding that the VN Index would rebound to the 1,000 point level soon.
Other investors also said that it was quite normal to see the VN Index go up and down. Some of them said that they would buy shares in when the prices further dropped, adding that the report would only frighten cowardly investors.
Don Lam, Director General of Vina Capital, has advised investors to keep calm and be rational when making investment decisions. Financial institutions have the right to make their own assessments, and the assessments should be considered thoroughly.
Source: VNE
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